Basic Chemicals Criteria
The Basic Chemicals Eligibility
Criteria of the Climate Bonds
Standard & Certification Scheme
Updated: April 2023

NOTE: These Criteria can be used to certify Use-of-Proceeds Instruments, Sustainability-Linked
Debt Instruments, Assets and Entities per the Climate Bonds Standard V4.0

Revision

Date

Summary of Changes

Rev. 1.1

13 April 2023

Minor revisions to framing to reflect release of CBS v4.0

Rev. 1.0

11 October 2022

Final for Issuance

Rev. 0.1

06 April 2022

Issued as draft for Public Consultation

Climate Bonds Initiative - Basic Chemicals Criteria Document
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Acknowledgements
Climate Bonds gratefully acknowledges the Technical and Industry Working Group members who supported the development of these
Criteria. Members are listed in Appendix A.
Special thanks are given to Elias Martinez, the lead specialist and Marian Rodriguez for coordinating the development of the Criteria throughthe Technical Working Group.
The Industry Working Group provided critical and useability focused consultation and feedback on the Criteria, but this does not
automatically reflect endorsement of the criteria by all members.

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Definitions
Certified Entity: The entity or part thereof which is being certified under the Climate Bonds Standard. Currently, Entity Certification
is limited to non-financial Entities or segregated segments thereof, for which the Climate Bonds Initiative has Climate Bonds
Standard Sector Criteria for Entity Certification.
Climate Bonds Initiative (Climate Bonds): An investor focused not-for-profit organisation, promoting large-scale investments thatwill deliver a global low carbon and climate resilient economy. Climate Bonds seeks to develop mechanisms to better alignthe interests of investors, industry and government to catalyse investments at a speed and scale sufficient to avoid
dangerous climate change.
Climate Bonds Standard (CBS): A screening tool for investors and governments that allows them to identify green bonds theproceeds of which are being used to deliver climate change solutions. This may be through climate mitigation impact
and/or climate adaptation or resilience. The CBS is made up of two parts: the parent standard (CBS v4.0) and a suite of
sector specific eligibility Criteria. The parent standard covers the certification process and pre- and post-issuancerequirements for all certified bonds, regardless of the nature of the capital projects. The Sector Criteria detail specificrequirements for assets identified as falling under that specific sector. The latest version of the CBS is published on the
Climate Bonds website.
Climate Bonds Standard Board (CBSB): A board of independent members that collectively represents $34 trillion of assets undermanagement. The CBSB is responsible for approving (i) Revisions to the CBS, including the adoption of additional sector
Criteria, (ii) Approved verifiers, and (iii) Applications for Certification of a bond under the CBS. The CBSB is constituted,
appointed, and supported in line with the governance arrangements and processes as published on the Climate Bonds
website.
Climate Bond Certification: allows the issuer to use the Climate Bond Certification Mark in relation to that bond. Climate Bond
Certification is provided once the independent CBSB is satisfied the bond conforms with the CBS.
Critical interdependencies: The asset or activity’s boundaries and interdependencies with surrounding infrastructure systems.
Interdependencies are specific to local context but are often connected to wider systems through complex relationshipsthat depend on factors ‘outside the asset fence’ that could cause cascading failures or contribute to collateral systembenefits.
Green Bond: A green bond is a bond of which the proceeds are allocated to environmental projects or expenditures. The term
generally refers to bonds that have been marketed as green. In theory, green bonds proceeds could be used for a wide
variety of environmental projects or expenditures, but in practice they have mostly been earmarked for climate change
projects.
Industry Working Group (IWG): A group of key organisations that are potential issuers, verifiers and investors convened by Climate
Bonds. The IWG provides feedback on the draft sector Criteria developed by the TWG before they are released for public
consultation.
Investment Period: The interval between the bond’s issuance and its maturity date. Otherwise known as the bond tenor.
Parent Company/Group: A company is considered a parent company of another entity (a subsidiary) if it exercises control over thesubsidiary. The terms “control” and “subsidiary” have the meaning assigned to them under International Financial
Reporting Standard 10 (IFRS 10). A Parent Group consists of the Parent Company and all the companies that the Parent
Company exercises control over. Where the Applicant does not belong to a group of companies, the term Parent Company
applies to the Applicant.
Sustainability-Linked Debt (SLD): Any debt instrument for which the financial and structural characteristics can vary depending onwhether the issuer achieves predefined Sustainability/ ESG objectives. Such objectives are measured through predefined
KPIs and assessed against predefined performance targets. Proceeds of SLD are intended to be used for general purposes.
Technical Working Group (TWG): A group of key experts from academia, international agencies, industry and NGOs convened by
Climate Bonds. The TWG develops the Sector Criteria - detailed technical criteria for the eligibility of projects and assets
as well as guidance on the tracking of eligibility status during the term of the bond. Their draft recommendations arerefined through engagement with finance industry experts in convened Industry Working Groups (see below) and throughpublic consultation. Final approval of Sector Criteria is given by the CBSB.

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Table of Contents
Definitions

3

1

6

2

3

4

5

6

Introduction
1.1

The Climate Bonds Standard

6

1.2

Environmental Scope of the Basic Chemicals Criteria

6

1.3

What can be certified under the Basic Chemicals Criteria

6

1.4

Documents supporting these criteria

7

1.5

Revisions to these Criteria

7

Basic Chemicals Activities in Scope

8

2.1

Eligible basic chemicals

8

2.2

Alignment with other sector criteria

9

Criteria for Decarbonisation Measures within Facilities Producing Basic Chemicals

9

3.1

Mitigation Criteria

93.2

Adaptation & Resilience

14

Criteria for Facilities Producing Basic Chemicals

17

4.1

Basic chemical-specific mitigation criteria

17

4.2

Adaptation & Resilience Criteria

20

4.2.1

The adaptation and resilience checklist

20

4.2.2

Other environmental impacts

26

4.2.3

Disclosure component

26

Criteria for Entities and Sustainability-Linked Debt (SLD)

27

5.1

Base Chemical Criteria for Certified Entities

28

5.2

Base Chemicals Criteria for Sustainability-Linked Debt (SLD)

29

5.3

Methodological notes

30

5.3.1

Assessment at portfolio level - calculating average emissions intensity

30

5.3.2

Scope of emissions

30

5.3.3

Thresholds to be met every three years

30

Cross-cutting Criteria

31

6.1

Additional criteria depending on the age of the facility

31

6.2

Additional criteria depending on the feedstock used

31

6.3

Additional criteria depending on the energy used

31

6.4

Additional criteria to address upstream scope 3 emissions

31

6.5

Other additional criteria

31

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List of Figures
Figure 1: Chemical Industry Value Chain

8

List of Tables
Table 1: Eligible Basic Chemicals
Table 2: Assets or projects or assets partially or wholly covered by other sector criteria
Table 3: Criteria for eligible decarbonisation measures or retrofitting activities
Table 4: Adaptation & Resilience Performance Checklist for Basic Chemicals Decarbonisation Measures
Table 5: Basic chemical-specific carbon and energy intensity thresholds
Table 6: Adaptation and Resilience Criteria for Basic Chemicals Production Facilities
Table 7: Levels of Entity Certification
Table 8: Levels of SLD Certification

8
9
10
14
17
21
28
29

List of Appendices
Appendix A: TWG and IWG members

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1 Introduction
1.1 The Climate Bonds Standard
Investor demand for climate bonds is strong and is expected to increase in line with the delivery of quality products into the market.
However, investor concerns about the credibility of green labelling are also growing. Standards, assurance & Certification will beessential to improve confidence and transparency, which in turn will enable further strong growth in the market.
Today, the Climate Bonds Standard and Certification Scheme is an easy-to-use screening tool that provides a clear signal to investors
and intermediaries on the climate integrity of Certified Climate Bonds. Proposals are currently under consultation to also expand
certification to entities with climate integrity.
A key part of the Standard is a suite of sector-specific eligibility Criteria. Each sector-specific Criteria sets climate change benchmarks
for that sector that are used to screen debt instruments, assets and/ or entities, so that only those that have climate integrity, either
through their contribution to climate mitigation, and/or to adaptation and resilience to climate change, will be certified.
These sector-specific Criteria are determined through a multi-stakeholder engagement process, including TWG and IWG, convened
and managed by Climate Bonds, and are subject to public consultation. Finally, they are reviewed and approved by the Climate
Bonds Standard Board (CBSB).
The second key part of the Climate Bonds Standard (CBS) is the overarching Climate Bonds Standard V4.0. This documents describes
the cross-sectoral criteria all certified instruments/ assets/ entities must meet, in addition to meeting the sector specific Criteria.

1.2 Environmental Scope of the Basic Chemicals Criteria
Currently, certification requirements address:••

Climate change mitigation; andClimate adaptation and resilience.

1.3 What can be certified under the Basic Chemicals Criteria
Subject to meeting the eligibility criteria in the following sections, the following can be certified under these criteria:••••

Use-of-Proceed (UoP)1 bonds financing decarbonisation measures (e.g., retrofits) - see Section 3
Use-of-Proceed (UoP) bonds financing basic chemicals production facilities (i.e., assets and activities) - see Section 4
Assets not linked to any specific financing instrument (basic chemicals production facilities) - see Section 4
Entities (basic chemicals production companies) and Sustainability Linked Bonds (SLBs) issued by those entities - see
Section 5

See also the Climate Bonds Standard v4.0 for any cross sectoral requirements for Use-of-Proceeds, Sustainability-Linked Debt, Assetor Entity Certification. These cross sectoral requirements must be met in addition to the wind-specific requirements described inthis document.
To demonstrate compliance with the following Criteria, in accordance with the CBS, it is the applicant’s responsibility to provide theinformation to prove compliance with each component of these Criteria. Verifiers must include this information in the scope ofverification.

1 Use-of-Proceed (UoP) is used as shorthand throughout this document for a variety of targeted finance instruments, including green loans, repos, and asset-backed

securities.
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Where the bond portfolio includes several separately identifiable projects, expenditures, or groups of assets, these criteria must be
met for each separately identified project or asset grouping. Applicants should determine these project boundaries, which may bebased on geographical and/or supply chain linkages.

1.4 Documents supporting these criteria
Basic Chemicals-specific information to support Applicants and Verifiers is available at Basic Chemicals | Climate Bonds Initiative as
follows:•••

Basic Chemicals Background paper: Contains details on why the criteria were chosen
Basic Chemicals Frequently Asked Questions
Basic Chemicals public consultation feedback and responses summary

In addition, the following cross cutting information to support Applicants and Verifiers is available as follows:••

The Climate Bonds Standard v4.0: contains the requirements of the overarching CBS
The Climate Bonds Standard v4.0 Entity and Sustainability-Linked Debt Checklist documents: provides further informationon the cross-sectoral requirements for Entity and Sustainability-Linked Debt Certification respectively.

For more information on Climate Bonds and the Climate Bonds Standard and Certification Scheme, see www.climatebonds.net.

1.5 Revisions to these Criteria
These Criteria will be reviewed on a regular basis, at which point the TWG will take stock of the deals that are printed in the earlystages and any developments in improved methodologies and data that can increase the climate integrity of future deals. As aresult, the Criteria are likely to be refined over time, as more information becomes available. Certification will not be withdrawn
retroactively from bonds certified under earlier versions of the Criteria.

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2 Basic Chemicals Activities in Scope
2.1 Eligible basic chemicals
The Basic Chemicals Criteria apply to eligible assets and projects and companies relating to the production of a number of eligible
organic and inorganic basic chemicals. Figure 1 illustrates the chemicals value chain and the basic chemicals in scope, which arealso listed in Table 1.

Figure 1: Chemical Industry Value Chain
Table 1: Eligible Basic Chemicals
ChemicalGroupsEligible Assets

Inorganic basic
chemicals

•
•
•
•
•

Ammonia
Chlorine
Disodium carbonate/Soda ash
Nitric acid
Carbon black

Organic basic
chemicals•••High value chemicals (acetylene, ethylene, propylene, butadiene)
Aromatics (Benzene, Toluene and Xylene (BTX))
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2.2 Alignment with other sector criteria
In respect of UoP bond certifications, where the proceeds will be allocated to multiple sectors, proof of compliance with multiple
sector criteria may be required across the portfolio. For example, if the UoP bond is financing both basic chemicals activities andbioenergy activities, then the applicant would have to prove compliance with the Basic Chemicals Criteria in respect of the former
and the Bioenergy Criteria in respect of the latter.
In respect of SLD and Entity Certifications, where the SLD or entity Performance Targets span multiple activities within the entity,
all those activities will need to be assessed against the appropriate sector criteria and an overall ‘pass threshold’ reached. See the
Climate Bonds Standard v4.0 Parts D and C respectively for more information on this.
In some cases, it may not immediately be clear whether activities, facilities or projects might fall under these criteria or other sector
criteria. The possible overlaps, and appropriate sector criteria to be used, are clarified in Table 2.
Table 2: Assets or projects or assets partially or wholly covered by other sector criteria
Relating toSector Criteria

Bio-energy production

Bio-energy

Hydrogen production

HydrogenRenewable energy generation including Solar, Wind, Marine
Renewable, Hydropower and Geothermal energy

Relevant corresponding energy
sector criteria

3 Criteria for Decarbonisation Measures within Facilities Producing
Basic Chemicals
These criteria cover measures undertaken within production facilities to reduce the GHG emissions from that facility. For any
eligible decarbonisation measure, the costs of that measure are eligible use-of-proceeds under Use-of-Proceeds certification.

3.1 Mitigation Criteria
Table 3 lists potentially eligible decarbonisation measures, and any associated eligibility criteria specific to those investments.
In addition to those specific criteria, the decarbonisation measures must relate to a production facility where:•••

At least 50% of annual production is on the list of basic chemicals in scope (per Section 2).
The energy source is not coal or coal derivatives or biomass.
The feedstock is not coal or coal derivatives.

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Table 3: Criteria for eligible decarbonisation measures or retrofitting activities
Area

Decarbonisation Measure

Energy efficiency measures

Revamps, modifications or acquisition of equipment(boilers, furnaces, reactors, heat exchanger, distillation
columns and other separation units, etc.)

At least a 30 % improvement in energy efficiency.

Switching to low carbon
process technologies

Revamps, modification and acquisition of equipment
and other infrastructure needed for the
implementation and operation of low carbon process
technologies.

The alternative processes technology does not release direct process CO2 emissions, e.g., methane
pyrolysis, catalytic partial oxidation of methane to methanol.

Carbon Capture and Storage

Infrastructure related to CO2 capture of emissions
from the basic chemicals production, transportationand storage

Capture rate
The minimum capture rate from the entire facility should be 90%.

Mitigation criteria

Various

Plus, there is evidence2 that demonstrates the CO2 will be suitably transported and stored in linewith the criteria below:
Transport
1. The CO2 transported from the installation where it is captured to the injection point does notlead to CO2 leakages above 0.5 % of the mass of CO2 transported.
2. Appropriate leak detection systems are applied and a monitoring plan is in place, with thereport verified by an independent third party.
Storage
1.

2.

Characterisation and assessment of the potential storage complex and surrounding area, or
exploration3 is carried out in order to establish whether the geological formation is suitable foruse as a CO2 storage site.
For operation of underground geological CO2 storage sites, including closure and post-closure
obligations:2.1. Appropriate leakage detection systems are implemented to prevent release during
operation;

2 Either directly from the issuer or through contracts or agreements with a third party
3 ‘Exploration’ means the assessment of potential storage complexes for the purposes of geologically storing CO2 by means of activities intruding into the subsurface such as drilling to obtain geological information about strata in thepotential storage complex and, as appropriate, carrying out injection tests in order to characterise the storage site
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Decarbonisation Measure

Area

Mitigation criteria

3.

2.2. A monitoring plan of the injection facilities, the storage complex, and, where appropriate,
the surrounding environment is in place, with the regular reports checked by thecompetent national authority.
For the exploration and operation of storage sites, the activity complies with ISO
27914:20172254 for geological storage of CO2.

Furthermore, the use of any certification scheme is encouraged. Examples of certification schemes
include the U.S. EPA Class VI well certification, which includes reservoir characterisation5. Anotherexample includes the DNV GL certification framework to verify compliance with the ISO
27914:2017 Carbon dioxide capture, transportation and geological storage - Geological storage6.
Relating to feedstock used
Using hydrogen as afeedstock

Infrastructure for production using green hydrogen
Refurbishment and retrofitting of facilities to use greenhydrogenHydrogen used as a feedstock meets the thresholds in Table 3.

Acquisition of equipment to produce basic chemicals
using green hydrogen
Using CO2 as a feedstock

Infrastructure for production using CO 2 as a feedstock

1.

Refurbishment and retrofitting of facilities to use CO 2
as a feedstock2.

Acquisition of equipment to produce basic chemicals
using CO2 as a feedstock

3.

4.
5.

The source of CO2 sources is either:● Direct emissions from chemical production; OR● Direct emissions from other industrial activities
The basic chemical produced is used for the manufacture of durable products (e.g.
construction materials stored in buildings, or recyclable products e.g. PET).
If the basic chemical produced is used for products that release the CO2 immediately when the
products are used (such as in urea, carbonated beverages, or fuels), the capital investment is
not eligible.
CO2 is not used for enhanced oil recovery, and the production of other forms of fossil energy
sources.
This measure may involve the need for electricity when electrochemical processes are used,
and also the need for hydrogen as a feedstock. If so, that hydrogen must comply with the
Climate Bonds criteria for hydrogen.

4 ISO Standard 27914:2017, Carbon dioxide capture, transportation and geological storage - Geological storage (version of www.iso.org/standard/64148.html).
5 www.epa.gov/uic/class-vi-wells-used-geologic-sequestration-co2
6 www.dnv.com/news/dnv-gl-launches-certification-framework-and-recommended-practice-for-carbon-capture-and-storage-ccs--108096

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Decarbonisation Measure

Area
Using biomass as afeedstock

Infrastructure for production using biomass
Refurbishment and retrofitting of facilities to use
biomass

Mitigation criteria
The biomass used complies with the Climate Bonds Bio-energy criteria Section 3.2.2
Requirement 2: Reducing the risk of indirect land use impact

Acquisition of equipment to produce basic chemicals
using biomass

Use of recycled material
as feedstock (e.g. using
olefins recovered fromplastics chemical
recycling processes)

Infrastructure for the production using recycled
feedstock
Refurbishment and retrofitting of facilities using
recycled feedstock
Acquisition of equipment to produce basic chemicals
using recycled feedstock

Recycled material should:●●●

represent at least 20% of the feedstock in regions without local recycling regulations or withlower recycled content requirements.
represent more than 20% of the feedstock in regions with local recycling regulations. If theregion has a higher recycled content percentage, it should prevail.
have lower cradle-to-gate emissions than the virgin material

Relating to energy used
Electrification of theprocesses

Revamps, modifications and acquisition of equipment(furnaces, reactors, separators, etc.) and otherinfrastructure necessary for electrification of theprocesses

Automatically eligible

Heat supplied fromgeothermal, solar thermal
or waste heat recovery
systems

New heat exchange equipment, such as evaporators,
furnaces, boilers, etc.,

Automatically eligible

Using hydrogen as anenergy source

Revamps or modifications to equipment (boilers,
furnaces, burners, etc.) in existing utilities system
required for the use of hydrogen as fuelRevamps or modifications to heating related
equipment in existing process
Hydrogen used as a feedstock meets the thresholds in Table 3.

Infrastructure for the production of a basic chemical inscope using hydrogen as an energy source

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Area

Decarbonisation Measure

Using biomass as an energy
sourceRevamps or modifications to equipment (boilers,
furnaces, burners, etc.) in existing utilities system
required for the use of biomass as fuelInfrastructure for the production of a basic chemical inscope using biomass as an energy source

Basic Chemicals Criteria- Climate Bonds Initiative

Mitigation criteria
Only secondary organic streams are eligible. Wood and other dedicated crops are not eligible.
The bio-energy complies with the Climate Bonds Bio-energy criteria: Section 3.2.1.
Requirement 1: Meet the established GHG emissions threshold and conversion efficiency
percentage for heating/cooling, and co-generation (combined heat and power, CHP) facilities
using biofuel/biomass; and Section 3.2.2 Requirement 2: Reducing the risk of indirect land use
impact.

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3.2 Adaptation & Resilience
This section describes the Adaptation & Resilience (A&R) Component of the eligibility Criteria for decarbonisation measures. To
demonstrate compliance, all measures must satisfy the requirements of the checklists detailed below in Table 4.
The checklist is a tool to verify that the applicant has implemented sufficient processes and plans in the design, planning anddecommissioning phases of a measure to ensure that the operation and construction of the asset minimises environmental harmand the asset is appropriately adaptive and resilient to climate change and supports the adaptation and resilience of otherstakeholders in the surrounding system, if applicable.
All elements of the checklist must be addressed, and appropriate evidence provided that these requirements are being met or are
not applicable in respect of the specific measure(s) linked to the bond. It is expected that the applicant’s evidence will encompass
a range of assessment and impact reports and associated data, including but not limited to those reports required to meet national
and local licensing and approval processes. This might include Development Consent Orders, planning regulations adhered to,Environmental Impact Assessments, Vulnerability Assessments and associated Adaptation Plans.
It is the applicant’s responsibility to provide the relevant information to the verifier. Verifiers must include this information in thescope of verification.
For each question in the scorecard:•••A ‘yes’ indicates sufficient proof given.
A ‘no’ indicates insufficient proof.
In case of a ’n/a,’ please justify why the question is not applicable.

Table 4: Adaptation & Resilience Performance Checklist for Basic Chemicals Decarbonisation Measures
Adaptation and Resilience checklist for
Basic Chemicals Decarbonisation Measures

No.
1.

Proof Given

Overall
Assessment

For verifier to complete

Section 1: Clear boundaries and critical interdependencies between the measure and the system it operates within are
identified.
1.1.

Boundaries of the measure are defined using:
1. a listing of all assets and activities associated with the use of the bond proceeds,
2. a map of their location, and3. identification of the expected operational life of the activity, asset or project.

1.2.

Critical interdependencies between the measure(s) and the system within which it
operates are identified. Identification of these interdependencies should consider the
potential for adverse impacts arising from, but not limited to:
1.
2.
3.
4.
5.
6.

relationships of the measure(s) to nearby flood zones;
relationships of the measure(s) to surrounding water bodies and water courses;
reduction in pollinating insects and birds;
reduction in biodiversity or High Conservation Value7 habitat;
dust and other practices that affect air quality;
appropriation of land or economic assets from nearby vulnerable groups8;

7 High Conservation Value (HCV) habitat criteria in accordance with www.hcvnetwork.org.
8 According to IFC Performance Standards

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Adaptation and Resilience checklist for
Basic Chemicals Decarbonisation Measures

No.
2.

Proof Given

Overall
Assessment

For verifier to complete

Section 2 Clear boundaries and critical interdependencies between the measure and the system it operates within are
identified.
2.1.

Key physical climate risks and indicators of these risks are identified in line with thefollowing guidelines:•

Risks are identified based on (a) a range of climate hazards, and (b) information aboutrisks in the current local context, including reference to any previously identified
relevant hazard zones, e.g., flood zones.

In order to be confident that measures are robust and flexible in the face of climate change
uncertainties, it is essential that the climate risks being assessed and addressed coverthose that are of greatest relevance to industrial facilities and infrastructure such as basic
chemicals production plants and other infrastructure. The physical characteristics ofclimate change that must be considered in the risk assessment include:
•
•

•
•
•

Temperature riseo High temperatures can impact the operation and efficiency of certain typesof equipment.
Increasing intense precipitation eventso Heavy rainfall can result in flash pluvial flooding, which could significantly
impact industrial assets9.
o Drought may alter or reduce availability of water with temperature increase.
Changes in cloud cover, wind speed or increasing temperature extremeso Poses risks to the availability of reliable energy, both electrical or thermal.
Sea-level riseso Potential for flooding of coastal infrastructure and assets at risk from storm
surge events.
Increased soil erosion
o Risks to the availability of raw materials.
o Risk to transport routes for supply chains.

Guidance for carrying out Risk Assessments:
•
•
•
•
3.

Users should apply climate scenarios based on representative concentration pathway(RCP) 4.5 and 8.5 or similar/ equivalent to ensure consideration for worst casescenario.
Risk assessments should use both top-down methods and bottom-up methods thatlook at inherent system vulnerabilities in local context.
A broad range of models can be used to generate climate scenarios.
For risk assessment, the TCFD The Use of Scenario Analysis in Disclosure of ClimateRelated Risks and Opportunities is recommended.

Section 3: The measure is suitable to climate change conditions over its operational life
3.1

The equipment must be tolerant to the range of climate hazards identified in item 2 of thischecklist and not lock-in conditions that could result in maladaptation.

3.2.

Risk reduction actions/strategies must be tolerant to a range of climate hazards and not
lock-in conditions that could result in maladaptation.

9 Flood risk and resilience will likely have interdependencies with local and national agencies, for example related to local flood defences, coastal flood risk

management, shoreline management plans etc.
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Adaptation and Resilience checklist for
Basic Chemicals Decarbonisation Measures

No.
4.

Proof Given

Overall
Assessment

For verifier to complete

Section 4: The measure does no harm to the climate resilience of the defined system it operates within, as indicated by theboundaries of and critical interdependencies with that system as identified in item 1 in this checklist.
The equipment itself does not pose significant risk of harm to the system it is locatedwithin or others’ natural, social, or financial assets according to the principle of best
available evidence during the investment period, taking into account the boundaries andcritical interdependencies as defined in item 1 in this checklist.
Harm is defined as an adverse effect on any of the following items:
1.
2.
3.
4.
5.
6.

Adverse effects on local water bodies and water courses;
Air pollution from dust and other pollutants;
Relationships of the measure to nearby flood zones;
Reduction in pollinating insects and birds;
Reduction in biodiversity or High Conservation Value10 habitat;
Appropriation of land or economic assets from nearby vulnerable groups11.

10 High Conservation Value (HCV) habitat criteria in accordance with HCV Network
11 According to IFC Performance Standards

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4 Criteria for Facilities Producing Basic Chemicals
The production facility is eligible if it meets:
a.
b.
c.

Basic chemical-specific mitigation criteria (see Section 4.1); AND
Cross-cutting mitigation criteria that apply to all facilities regardless of the basic chemical(s) being produced (seeSection 4.2); AND
Adaptation and resilience criteria (see Section 4.2).

In addition to these criteria, the production facility must comply with the following headline requirements:•••

At least 50% of annual production is on the list of basic chemicals in scope (per Section 2).
The energy source is not coal or coal derivatives or biomass.
The feedstock is not coal or coal derivatives.

If the bond portfolio (e.g. for UoP certification) or the asset portfolio (for Asset certification) includes several production facilities,
these criteria must be met by each facility for the portfolio to be eligible. I.e., there is no averaging across the portfolio.

4.1 Basic chemical-specific mitigation criteria
Production from that facility needs to meet specific emissions or energy intensity thresholds or other criteria per Table 5. below.
Table 5: Basic chemical-specific carbon and energy intensity thresholds

Asset Type
Productionof ammonia

Criteria
2022

2030

2040

2050

<3 t CO2e/t H2, forthe life cycle
emissions ofhydrogen used as
feedstock

1.67 t CO2e/t H2 forthe life cycle
emissions ofhydrogen used as
feedstock

1.0 t CO2e/t H2 forthe life cycle
emissions ofhydrogen used as
feedstock

0.6 t CO2e/t H2 forthe life cycle
emissions ofhydrogen used as
feedstock

or

or

or

or

ammonia isrecovered fromwastewater.

ammonia isrecovered fromwastewater.

ammonia isrecovered fromwastewater.

ammonia isrecovered fromwastewater.

Productionof nitric acid

0.038 t CO2e/t nitricacid

0.021 t CO2e/t nitricacid

0.011 t CO2e/t nitricacid

0.007 t CO2e/t nitricacid

Productionof chlorine

2.45 MWhelectricity/t chlorine

1.85 MWhelectricity/t chlorine

Uses only electricity
produced fromrenewable sources

Uses only electricity
produced fromrenewable sources

Criteria applicable inall years
CO2 from ammonia
production should not
be used for urea
production.

Use electricity thatmeets the most up todate Climate Bonds
criteria for electricity
grids.
Implement one of thefollowing alternatives:a. Renewable-based12
captive power
generation
b. Renewable-based
power purchaseagreement

12 Energy produced from renewable sources such as wind, solar, and small hydropower generation

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Productionof carbon
black

1.141 t CO2e/t
carbon black

0.63 t CO2e/t carbon
black

0.34 t CO2e/t carbon
black

0.20 t CO2e/t carbon
black

Productionof disodium
carbonate/soda ash

0.789 t CO2e/t
disodium carbonate/soda ash0.44 t CO2e/t
disodium carbonate/soda ash0.23 t CO2e/t
disodium carbonate/soda ash0.14 t CO2e/t
disodium carbonate/soda ash

Productionof high value
chemicals(ethylene,
propylene,
butadiene)

0.51 t CO2e/t highvalue chemical

0.28 t CO2e/t highvalue chemical

0.15 t CO2e/t highvalue chemical

0.09 t CO2e/t highvalue chemical

Productionof aromatics
BTX14(benzene,xylene andtoluene)0.0072 t CO2e/t
aromatics BTX

0.0040 t CO2e/t
aromatics BTX

0.0021 t CO2e/t
aromatics BTX

0.0012 t CO2e/t
aromatics BTX

Productionof methanol<3 t CO2e/t H2, forthe life cycle
emissions ofhydrogen used as
feedstock

1.67 t CO2e/t H2 forthe life cycle
emissions ofhydrogen used as
feedstock

1.0 t CO2e/t H2 forthe life cycle
emissions ofhydrogen used as
feedstock

0.6 t CO2e/t H2 forthe life cycle
emissions ofhydrogen used as
feedstock

Implement one of thefollowing alternatives:c. Renewable-based13
captive power
generation
d. Renewable-based
power purchaseagreement

13 Energy produced from renewable sources such as wind, solar, and small hydropower generation
14 BTX measured as complex weighted throughput. Refer to: www.concawe.eu/publication/report-no-912/

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Box 1: Methodological notes for meeting the emissions intensity threshold1.

In terms of meeting the facility-level emissions intensity thresholds going forward, applicants issuing a UoP bond for a basic
chemical facility may either:a) Calculate the average facility-level emissions intensity threshold over the term of certification, and demonstrate thatthe facility meets that average threshold at the time of certification; orb) Meet the threshold at the time of certification and commit to 3 yearly assessments by an approved verifier throughout
the period of certification to verify that at each 3 yearly check-in, the facility meets the new, lower emissions intensity
threshold in place at that time. If on any 3 yearly verification the facility is not demonstrated to meet the emissions
intensity threshold then in place, certification will be removed.

A linear trajectory should be assumed for time periods between the dates and thresholds provided in Table 5. For a production
plant producing different basic chemicals, a mass balance must be used to estimate the carbon intensity of each product or groupof products.
Example:Option a. Compliant
A 10-year bond starting in 2025 for HVC production may demonstrate that the plant’s emissions intensity at the
point of issuance meets the average emissions intensity of the plant pathway between 2025 and 2035:•

2025 threshold = 0.28•2035 threshold = 0.15•

(0.28 + 0.15)/ 2 = 0.215t CO2/t HVC•

The facility’s emissions intensity in 2025 is already 0.20t CO 2/t HVC. This is lower than the necessary averaged threshold(0.215 t CO2/t HVC) and the facility meets the criterion. No further verification is required for meeting emissions
intensity thresholds.
Option b. Complianta)

A 10-year bond staring in 2035 would have to show compliance in annual reporting for the thresholds of 2035, 2038,
and 2041. A linear trajectory should be assumed for time periods between the dates and thresholds provided in Table
5.

b) Verification must demonstrate every 3 years that these thresholds are met.
To demonstrate compliance with any of the emissions intensity thresholds set in Table 5, issuers are required tocarry out a GHG emissions assessment as described in Box 2.
2.

A note on interpretation for facilities producing chlorine: Table 5 presents quantitative thresholds up to 2039, and qualitative
criteria after 2040. In this case, if certification is of a financial instrument whose term extends beyond 2039, issuers are
required to present a transition plan to ensure that the shift to renewable electricity is effective after 2040.

The transition plan should include as a minimum the following details:
•
•
•
•
•
3.

A timeframe for the implementation of the project, with a start and a due date
Main action steps of the transition plan
Infrastructure or operation modifications required for the implementation
Estimation of total additional operating and capital costs
Technical and financial feasibility

Applicants seeking certification of an asset not linked to any financial instrument must: Meet the facility-level
pathway threshold at the time of certification.15

15 As this is a point-in-time certification, there is no need to continuously meet the pathway thereafter.

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Box 2: Methodological notes for GHG assessment
The following emissions should be accounted for when comparing to the thresholds in Table 5.

•

Nitric Acid, and Soda Ash: Scope 1 emissions which include all direct emissions from the production processes:
emissions generated during the chemical reactions, emissions from fuel combustion on-site.
Carbon black, HVC and aromatics: Scope 1 as defined above, plus Scope 2 emissions which includes indirectemissions from the energy imported from off-site.
Methanol and Ammonia: GHG emissions are for the life cycle emissions of hydrogen used as feedstock.
Chlorine: The benchmark is for the electricity intensity of the process. No GHG accounting is required for chlorine.
Electricity must be from renewable sources.

•••

The GHG emissions assessment should follow the latest version of the GHG accounting guidance for scope 1 and 2
emissions provided by the GHG protocol16. Results should be verified by an independent third party following thelatest version of the GHG protocol standards17 . Calculation using Regulation (EU) 2019/331 will be acceptable forassets located in the EU.
Life Cycle GHG Assessment for hydrogen: Cradle-to-site boundary includes cradle-to-gate emissions plus any
transportation emissions to the site where a product is used. In this case, the life cycle assessment should follow
ISO standards18 (ISO 14040 and ISO 14044). The Recommendation 2013/179/EU will be acceptable for assets locatedin the EU. Results should be verified by an independent third party.

4.2 Adaptation & Resilience Criteria
4.2.1 The adaptation and resilience checklist
This section describes the Adaptation & Resilience (A&R) Component of the eligibility Criteria for basic chemicals production
facilities. To demonstrate compliance, all facilities must satisfy the requirements of the checklists detailed below in Table 6.
The checklists are tools to verify that the applicant has implemented sufficient processes and plans in the design, planning anddecommissioning phases of a facility/facilities to ensure that the operation and construction of the facility minimises environmental
harm and the facility is appropriately adaptive and resilient to climate change and supports the adaptation and resilience of otherstakeholders in the surrounding system, if applicable.
All elements of the checklist must be addressed, and appropriate evidence provided that these requirements are being met or are
not applicable in respect of the specific facility linked to certification. It is expected that the applicant’s evidence will encompass a
range of assessment and impact reports and associated data, including but not limited to those reports required to meet national
and local licensing and approval processes. This might include Development Consent Orders, planning regulations adhered to,Environmental Impact Assessments, Vulnerability Assessments and associated Adaptation Plans.
It is the applicant’s responsibility to provide the relevant information to the verifier. Verifiers must include this information in thescope of verification.
For each question in the scorecard:•••A ‘yes’ indicates sufficient proof given.
A ‘no’ indicates insufficient proof.
In case of a ’n/a,’ please justify why the question is not applicable.

16 The GHG protocol (2019). GHG accounting guidance for scope 1 and 2 emissions. WBCSD and WRI.

https://ghgprotocol.org/sites/default/files/Guidance_Handbook_2019_FINAL.pdf
17 The GHG protocol (2004). A Corporate Accounting and Reporting Standard. WBCSD and WRI. https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-

revised.pdf
18 ISO standards available at: www.iso.org/standard/38498.html; www.iso.org/standard/37456.html

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Table 6: Adaptation and Resilience Criteria for Basic Chemicals Production Facilities
Adaptation and Resilience checklist for
Basic Chemical Production Facilities

No.
1.

2.

Proof Given

Overall
Assessment

For verifier to complete

Section 1: Clear boundaries and critical interdependencies between the production facility and the system it operates
within are identified.
1.1.

Boundaries of the infrastructure are defined using:
1. a listing of all assets and activities associated with the use of the bond proceeds,
2. a map of their location, and3. identification of the expected operational life of the activity, asset or project.

1.2.

Critical interdependencies between the infrastructure and the system within which it
operates are identified. Identification of these interdependencies should consider the
potential for adverse impacts arising from, but not limited to:
1. The effects of supply disruption or interruption on dependent electricity users or
populations;
2. Exacerbation of wildfires;
3. Relationships of the asset/activity to surrounding water bodies and water courses;
4. Relationships of the asset/project to residential neighbourhoods surrounding theplant;
5. Damage or reduction in value of neighbouring property due to boundary structuresat risk of falling during storm events;
6. Reduction in value of neighbourhood property due to pollution caused by thechemical facilities, due to extreme weather events (e.g., release of toxic chemicals
due to failure in safety systems in case of extreme weather events);
7. Reduction in biodiversity or High Conservation Value19 habitat;
8. Relationships of the asset/project to nearby flood zones;
9. Fire and other practices that affect air quality;
10. Appropriation of land or economic assets from nearby vulnerable groups20;

Section 2: An assessment has been undertaken to identify the key physical climate hazards to which the production facility
will be exposed and vulnerable to over its operating life
2.1.

Key physical climate risks and indicators of these risks are identified based on:a. a range of climate hazards, andb. information about risks in the current local context, including reference to any
previously identified relevant hazard zones, e.g., flood zones. In order to be
confident that assets and activities are robust and flexible in the face of climatechange uncertainties, it is essential that the climate risks being assessed andaddressed cover those that are of greatest relevance to the production of basic
chemicals.
• Is there a good understanding of the risks facing the facility today? In five
years? In ten years?
• Are risks defined and detailed?
• Are risk areas for hazardous materials21 identified?
• Was a hazard assessment conducted to identify toxic, flammable, volatile andreactive chemicals22 23?

19 High Conservation Value (HCV) habitat criteria in accordance with www.hcvnetwork.org
20 According to IFC Performance Standards
21 Hazardous materials include Explosive, flammable, combustible, corrosive, oxidising, toxic, infectious, or radioactive materials (Federal Emergency Management

Agency)22 UCLID (International Uniform Chemical Information Database) software is a recommended source of data on intrinsic and hazard properties of chemical

substances
23 www.openaccessgovernment.org/climate-toxicology-human-health/68647

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Adaptation and Resilience checklist for
Basic Chemical Production Facilities

No.

Proof Given

Overall
Assessment

For verifier to complete•

Was a Risk management plan (RMP) conducted for the chemicals in the list of
regulated substances24?
• Is there an accident management plan in place?
• Time horizon is set according to the severity of the risks. Higher risk locations: shortertime (every 5 years). Lower risk locations: Longer time (every 10 years25). See
Section 5.3 of the Background Paper for tools and reference guidelines to assess
degree of risks.
• Where accurate assessments of climate variability for specific locations are notpossible, use worst-case scenarios.
Optional guidance for carrying out risk assessments is offered in Section 5.3 of the
Background Document.
The potential impacts that must be considered in the risk assessment include the ones
described in the following sections (2.2-2.9)26:
2.2.

Temperature rise and heat waves
1.
2.
3.
4.
5.
6.
7.
8.
9.

Potential increase in temperature may result in expansion and stress of plant,
pipework and fittings.
There could be an increase in dust emissions from the site.
There could be an increase in odour from the site.
Increase in fugitive or diffuse emissions from the site.
Increase in pollution
Increase in water consumed for cooling purposes.
Increase in energy consumption due to added pumping of cooling water around site.
Limited cooling, which implies that throughputs could need to be reduced orprocesses shut down
Volatile chemicals can exceed their temperature range during transportation

2.3. .

Extreme cold weather
1. Failure of trace heating systems
a. Freezing of cooling water, resulting in blockages - particularly on longpipelines and storage in exposed areas.
b. Process failures
2. Pipework ruptures, affecting:
3. Boiler condensate, process water, cooling water, effluent systems, this in turn may
lead to process interruption.
4. Failure of pH control due to caustic systems solidifying (such as effluent treatment)
5. Catalytic processes can be affected, reducing performance
6. Freezing of coolant lines, equipment, and chemical reaction vessel resulting in rising
reaction temperature and pressure
7. Frozen onsite roadways may restrict access for staff and emergency vehicles.
8. Lack of water for fire suppression
9. Damage to site infrastructure from snow-loading over extended periods.

2.4.

Daily extreme rainfall
1. Flooding could lead to increased site surface water and flash flooding
2. The site may experience reduced access or egress due to site flooding.
3. Stored substances can react with water or be contaminated
4. Uncontrolled chemical reactions, for example due to shut down of refrigeration
systems as a consequence of power outages and lack of backup facilities

24 EPA - Risk Management Plan Rule (www.epa.gov/rmp/risk-management-program-rmp-rule-overview)
25 High/low risk areas are not generally provided by any source. It is recommended to look at potential climate hazards and identify which assets are likely to be

exposed to those hazards, the likelihood and consequences of the exposure, and then identify how risky those assets are to climate change.
26 Chemical Industries Association, 2021. Safeguarding chemical businesses in a changing climate. How to prepare a Climate Change Adaptation Plan

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Adaptation and Resilience checklist for
Basic Chemical Production Facilities

No.
5.
6.

Proof Given

Overall
Assessment

For verifier to complete

Emergency relief systems, which work at atmospheric discharge pressure can beaffected due to the static head of water.
Process equipment running hot materials can be affected by thermal stress

2.5.

Season rainfall increase
1. Overland flow or groundwater flooding.
2. Flooding and associated impacts, as previously identified.

2.6.

Sea level rise
If located near the coast a site could experience increased:
1. Risk of flooding and associated impacts, as previously identified
2. Corrosion due to increase in saltwater spray
3. Reduction of useful life of assets due to frequent exposure to salty water

2.7.

Drier seasons
1.
2.

3.

Potential increased use or reliance on mains water for dust suppression and cleaning.
Potential for increase in dust emissions from the site.

2.8.

Decreased river flow
1. Reduced dilution available in receiving watercourse for discharge of effluent, resulting
in increased pollution

2.9.

Wildfires
1. Severe damage on buildings, process equipment and industrial infrastructure
2. Release of toxic pollutants
3. Volatile organic solvents with low flash points can exacerbate the fire risk
4. Explosions
5. Pipelines for transporting oil and gas, fuel storage facilities, external floating rooftanks for combustible liquids can spread the fire
6. Supply chain disruption

Section 3: The measures that have or will be taken to address those risks, mitigate them to a level such that the production
plant is suitable to climate change conditions over its operational life.
3.1.

The following are examples of risk management activities27 that bond issuers might
consider, or that might be adopted as part of regulations (e.g., codes and standards). This
list is not exhaustive and bond issuers should fully assess the mitigation measures that are
relevant to the climate risks and impacts identified in the risk assessment. Measuresdepend on the specific and local conditions of an asset.

3.2.

Temperature rise and heat waves
1. Identify temperature limits that could impact your processes and workers
2. Regular inspection and preventative maintenance of plant and equipment.
3. Regular site cleaning and use of dust suppression systems
4. Appropriate odour abatement is in place and maintained effectively
5. Appropriate odour management plan is in place
6. Make sure an appropriate fugitive or diffuse emissions plan is in place.
7. Water can be cleaned and recirculated for reuse on site
8. Alternative cooling systems.
9. Assess how efficient the current cooling system is, and to propose upgrades ormodifications where necessary.

3.3.

Extreme cold weather
1.

Identify temperature limits that could impact your processes and workers

27 Chemical Industries Association, 2021. Safeguarding chemical businesses in a changing climate. How to prepare a Climate Change Adaptation Plan

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Adaptation and Resilience checklist for
Basic Chemical Production Facilities

No.
2.
3.

4.
5.
6.
7.

Daily extreme rainfall
1. Suitable measures are in place for the management of expected surface water andflood waters
a. Drainage systems are inspected and maintained
b. External areas where wastes are handled or stored are provided withcontained drainagec. The site drainage system and effluent treatment plant has sufficient storage
or treatment capacity
2. Make sure there are suitable alternative transport routes to and from the site.

3.5.

Season rainfall increase2.

3.

Overall
Assessment

For verifier to complete

Regularly inspect and maintain insulation, particularly on pipework and equipment in
exposed areas of the site.
Consider added insulation on pipework containing water review operatingprocedures to make sure pipework is not left full of static water when not in use
identify any potential dead-legs where static water may be held up
Reviewing the capability of caustic systems to remain liquid at expected colder
temperatures.
Regularly inspect and maintain roadways during winter and remove any standing
water
Make sure grit is available to treat road surfaces
Review the design of structures to withstand increased loadings.

3.4.

1.

Proof Given

Make sure suitable measures are in place for the management of anticipatedoverland flow or groundwater flooding.
Prepare flood plan including:a. Risk assessment of process equipment and services at greatest risk fromfloodingb. Provision of emergency pumps to remove floodwater and identification oflowest risk location for discharge of floodwaters
c. Protection of control and electrical systems
d. Identification and protection of flat bottom tanks at risk of floating infloodwater
Ensure backup power, capable of functioning during extreme weather events andguarantee the stability and safety of the stored chemicals.

3.6.

Sea level rise
1. Prepare flood plan including:a. Risk assessment of process equipment and services at greatest risk fromfloodingb. Provision of emergency pumps to remove floodwater and identification oflowest risk location for discharge of floodwaters
c. Protection of control and electrical systems
d. Identification and protection of flat bottom tanks at risk of floating infloodwater
2. Prevent corrosion. Measures could include making sure that plant or equipment
prone to corrosion are:a. Protected, such as by being painted with resistant coating
b. Regularly inspected and maintained

3.7.

Drier seasons
1. Measures are in place to review and minimise water use and to maximise collection
and use of rainfall
a. Mains water capacity is adequate, taking into account reduced availability ofrainwater for activities such as dust suppression and cleaning

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Adaptation and Resilience checklist for
Basic Chemical Production Facilities

No.
2.

4.

Proof Given

Overall
Assessment

For verifier to complete

Potential for increase in dust emissions from the site.

3.8.

Decreased river flow
1. Review the environmental risk assessment for discharge to water from on-site
effluent treatment
2. Check existing environmental risk assessment to make sure low river flow used inassessment remains valid - if not, discuss with Environment Agency (local site
inspector and water quality team) and carry out an updated environmental risk
assessment

3.9.

Wildfires
1. Implement active fire prevention measures such as fire detector, gas detector, designof sprinkler systems, use of line detectors, design of deluge systems, design of
gaseous extinguishing systems28
2. Implement passive fire protection measures, like permanent inertization of
warehouses, support for pipe racks, fireproofing cabling, use of fire resistance cablecoating, protection of tank farms
3. Storage protection measures such as distancing to avoid fires from spreading within
an industrial complex
4. Wildland and vegetation management

Section 4: The facilities do no harm to the climate resilience of the defined system they operate within, as indicated by theboundaries of and critical interdependencies with that system as identified in item 1 in this checklist.
4.1.

The facilities themselves do not pose significant risk of harm to the system they are locatedwithin or others’ natural, social, or financial assets according to the principle of best
available evidence during the investment period, taking into account the boundaries andcritical interdependencies as defined in item 1 in this checklist.
Harm is defined as an adverse effect on any of the following items:
1.
2.
3.
4.
5.
6.

5.

Adverse effects on local water bodies and water courses;
Air pollution from dust and other pollutants;
Relationships of the asset/project to nearby flood zones;
Reduction in pollinating insects and birds;
Reduction in biodiversity or High Conservation Value29 habitat;
Appropriation of land or economic assets from nearby vulnerable groups30.

Section 5: The issuance is required to demonstrate that there will be ongoing monitoring and evaluation of the relevanceof the risks and resilience measures and related adjustments to those measures will be taken as needed.
5.1.

Indicators for risks identified under item 2 in this checklist are provided.
•

5.2.

Risk thresholds/trigger levels, for which new adaptation actions are set31, aremonitored

Indicators for risk mitigation measures identified under item 3 in this checklist areprovided.
•

Determine whether planned outputs and outcomes from adaptation actions havebeen achieved32.

28 Wehmeier & Mitropetros (2016). Fire Protection in the Chemical Industry
29 High Conservation Value (HCV) habitat criteria in accordance with www.hcvnetwork.org
30 According to IFC Performance Standards
31 The adaptation process Coastal Climate Adaptation Decision Support (C-CADS), 2018.
32 National Climate Change Adaptation Research Facility. NCCARF, 2018.

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Adaptation and Resilience checklist for
Basic Chemical Production Facilities

No.
5.3.

Proof Given

Overall
Assessment

For verifier to complete

Issuers have a viable plan to annually monitor and evaluate
a.
b.
c.

climate risks thresholds/triggers,
climate resilience performance,
appropriateness of climate resilience measure(s) and to adjust as necessary toaddress evolving climate risks.

4.2.2 Other environmental impacts
A thorough Environmental Impact Assessment for the facility and its site consistent with local regulations must be conducted by anindependent third-party expert. The risks identified in that assessment have been addressed by implementing mitigation andcompensation measures involving key stakeholders. In addition, the following specific requirements apply:
Pollution prevention•••

Emissions must be lower than best available techniques emissions levels for the production of large volume organic
chemicals33 or large Volume Inorganic Chemicals-Ammonia, Acids and Fertilisers34.
Emissions must be lower than Best Available Techniques emissions levels for the wastewater and waste gas
treatment/management systems in the chemical sector35
The activity is not associated with the manufacture, placing on the market or use of: Persistent organic pollutants (POPs) 36
Mercury and mercury compounds, their mixtures and mercury-added products37, substances that deplete the ozone
layer38, certain hazardous substances in electrical and electronic equipment39.

4.2.3 Disclosure component
In the interests of transparency and disclosure, the following must be publicly disclosed:••

The planning standards, environmental regulations and other regulations that the facility has been required to comply
with.
The environmental impacts assessment for the facility and the measures taken to address identified risks.

33 https://eippcb.jrc.ec.europa.eu/sites/default/files/2019-11/JRC109279_LVOC_Bref.pdf
34 https://eippcb.jrc.ec.europa.eu/sites/default/files/2019-11/lvic_aaf.pdf
35 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016D0902&from=EN
36 http://chm.pops.int/TheConvention/ThePOPs/AllPOPs/tabid/2509/Default.aspx
37 www.mercuryconvention.org/sites/default/files/2021-06/Minamata-Convention-booklet-Sep2019-EN.pdf
38 https://ozone.unep.org/treaties/montreal-protocol/summary-control-measures-under-montreal-protocol
39 Annex II: https://ec.europa.eu/environment/topics/waste-and-recycling/rohs-

directive_en#:~:text=The%20RoHS%20Directive%20currently%20restricts,and%20diisobutyl%20phthalate%20(DIBP).
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5 Criteria for Entities and Sustainability-Linked Debt (SLD)
The following sections detail similar, yet distinct, criteria depending on what is being certified:••

A “Certified Entity” (in this case, a company or business segment producing basic chemicals in the scope of these criteria) - See
Section 5.1
SLD issued by such a company - See Section 5.2.

Section 5.3 contains methodological notes applicable to these requirements.
See also the Climate Bonds Standard v4.0 for the cross sectoral requirements for Entity and SLD Certification relating to Transition
Plans and Disclosure for the Certified Entity and requirements in respect of the Parent Group (if any). These cross sectoral
requirements must be met in addition to the base chemical production-specific requirements described here.
NOTE:

The Climate Bonds Standard allows for the certification of only part of a company or group ofcompanies, or SLD that relates to only part of a company or group of companies. See the Climate
Bonds Standard v4.0 for full details. This flexibility enables the certification of the part of acompany or group of companies relating to base chemical production, separate from thecertification of other activities of the company or group of companies of which it forms a part, forexample a business segment producing base chemicals covered by these Sector Criteria.

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5.1 Base Chemical Criteria for Certified Entities
Two levels of entity certification are available, described in Table 7:
Table 7: Levels of Entity Certification
Certificationlevel

Level 1:
“Aligned”

Entity Certification Requirements
Climate Mitigation Criteria
1. At the time of certification the Certified Entity’s basic chemicals production facilities
average emissions intensity and/or energy intensity of each group of chemicals under scopeof these criteria meets the entity level pathway threshold and their future Performance
Targets to 2050 continue to meet those declining thresholds (see Section 4.1, Table 5 andthe methodological notes in Section 5.3); and2. If any of the Certified Entities basic chemicals production facilities use alternative feedstocks
or alternative fuels, implement electrification or use CCU or CCS, they must meet therespective cross-cutting criteria in Section 6. More details in Section 3, Table 3.
3. For any plant becoming operational post certification date, that plant will meet the criteria
described in Section 6 from day 1 of commencing operation. Details of this to be provided
in the Certified Entity’s transition plan.
Adaptation and Resilience Criteria:
At the time of certification, all of the Assessed Entity’s facilities meet the adaptation and resilience criteria
described in Section 4.2.

The criteria are the same as for Level 1, except:
Level 2:
“Transitioning”

The Certified Entity’s basic chemicals production facilities average emissions intensity does not meetthe emissions intensity threshold at the time of certification, but the future Performance Targets
align with those entity-level emissions thresholds by 2030 and continue to align thereafter throughto 2050 (see Section 4.1, Table 5 and the methodological notes in Section 5.3)

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5.2 Base Chemicals Criteria for Sustainability-Linked Debt (SLD)Two levels of SLB certification are available, described in Table 8:
Table 8: Levels of SLD Certification
Certification
Level

Level 1:
“Aligned”

SLD Certification Requirements
Climate Mitigation Criteria
1. At the time of certification the average emissions intensity and/or energy intensity of thebasic chemicals production facilities for each eligible base chemical represented by the
Performance Targets linked to the SLD meets the entity level pathway threshold and their
future Performance Targets to 2050 continue to meet those declining thresholds (seeSection 4.1, Table 5 and the methodological notes in Section 5.3); and2. If any of the basic chemicals production facilities represented by those Performance Targets
use alternative feedstocks or alternative fuels, implement electrification or use CCU or CCS,
they meet the respective cross-cutting criteria in Section 6. More details in Section 3, Table
3.
3. For any plant represented by those Performance Targets becoming operational post
certification date, that plant will meet the criteria described in Section 6 from day 1 ofcommencing operation. Details of this to be provided in the Applicant’s transition plan.
Adaptation and Resilience Criteria:
At the time of certification, all of the company’s facilities meet the adaptation and resilience criteria
described in Section 4.2, and that is reassessed and reconfirmed every five years during the term of
the SLD.
The criteria are the same as for Level 1, except:

Level 2:
“Transitional”

The average emissions intensity of the basic chemicals production facilities represented by the
Performance Targets linked to the debt does not meet the emissions intensity threshold at the timeof certification, but the future Performance Targets align with those emissions thresholds by 30
December 2030 and continue to align thereafter through to 2050 (see Section 4.1, Table 5 and themethodological notes in Section 5.3)

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5.3 Methodological notes
5.3.1 Assessment at portfolio level - calculating average emissions intensity
Assessment of whether the assessed entity’s basic chemicals production activities meet the emissions intensity and energy intensity
threshold is determined at a portfolio level. That is, the average emissions intensity and energy intensity across all of the basic
chemicals production facilities is calculated and compared to the respective thresholds. The assessment must be conducted
separately for each product or group of products under the scope of these criteria. It is not necessary to assess each facility
individually.

Box 3: Example:
A chemical company that produces ammonia, chlorine and nitric acid applies for certification:
The average emissions intensity of the hydrogen used in all of the ammonia production facilities must comply withthe thresholds in Table 5;
The average emissions intensity of all nitric acid production facilities must comply with the emissions intensity
thresholds in Table 5.
The average energy intensity of all chlorine facilities must comply with the energy intensity thresholds in Table 5.

5.3.2 Scope of emissions
The scope of emissions to be included is the same as those for individual production facilities. See Section 4.1, Table 5 for details.

5.3.3 Thresholds to be met every three years
The emissions intensity thresholds over time describe a smooth curve down over time. In reality, decarbonisation may likely resultin step changes in emissions levels. To reflect this, the Performance targets should align with the emission intensity threshold every
three years as a minimum, but annual alignment is not required.

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6 Cross-cutting Criteria
The following criteria apply in any plant, measure or Assessed Entity:

6.1 Additional criteria depending on the age of the facility
Facilities commencing operation in 2022 or after are eligible only if they:•••

Implement technologies which avoid or reduce direct process emissions in order to prevent carbon lock-in. (e.g. methane
pyrolysis does not generate CO2 in the reaction).
Do not use virgin fossil feedstock if process emissions are directly released into the atmosphere.
Do not use fossil fuels (with or without CCS).

6.2 Additional criteria depending on the feedstock used
Facilities or equipment using hydrogen, CO2 or biomass as feedstock are eligible only if they meet the following criteria:•••

Hydrogen: The hydrogen used meets the thresholds in Table 5 for hydrogen production.
Biomass: The biomass used complies with the criteria described in Table 3
CO2: The CO2 used satisfies the criteria described in Table 3.

6.3 Additional criteria depending on the energy used
Facilities or equipment using fossil gas, CO2 or biomass as feedstock are eligible only if they meet the following criteria:•••

Fossil gas: Only eligible for existing facilities prior to 2030, and then only when combined with CCS or CCU measures thatmeet the criteria for CCS in Table 3. Projects using fossil gas combined with CCS must demonstrate MRV (monitoring,
reporting and verification), and mitigation measures for methane leaks on site and upstream 40. Methane emissions must
be below 0.2%. Any venting or burning to be reported and accounted in the GHG assessment.
Hydrogen: The hydrogen used meets the thresholds in Table 5 for hydrogen production.
Biomass: The bio-energy complies with the criteria described in Table 3

6.4 Additional criteria to address upstream scope 3 emissions
Applicants must lay out a strategy to address scope 3 emissions, including one of the following alternatives:•••

Evidence for low-carbon procurement policies; orPartnerships with suppliers with GHG emissions reduction targets that can be measured; orSwitching from fossil-based raw materials to alternative feedstocks such as biobased and recycled materials.

For alternative feedstocks, results from a life cycle GHG assessment with a cradle-to-site boundary needs to be used to quantify
scope 3 upstream emissions.

6.5 Other additional criteria
Facilities using low carbon process technologies do not release direct process CO2 emissions, e.g. methane pyrolysis, catalytic partial
oxidation of methane to methanol.

40 Additional guidance can be found in the report Best Practice Guidance for Effective Methane Management in the Oil and Gas Sector. Monitoring, Reporting andVerification (MRV) and Mitigation. United Nations Economic Commission for Europe. 2019https://unece.org/fileadmin/DAM/energy/images/CMM/CMM_CE/Best_Practice_Guidance_for_Effective_Methane_Management_in_the_Oil_a nd_Gas_Sector__
Monitoring__Reporting_and_Verification__MRV__and_Mitigation-_FINAL__with_covers_.pdf
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Appendix A: TWG and IWG members
Climate Bonds Coordinator
Marian Rodriguez
Senior Research Analyst

Climate Bonds Initiative

CBI Technical Lead Advisor:
Elias Martinez
Senior Research Scientist

Biomass Conversion Division, Mexican Institute of Petroleum.
Independent consultant.

TWG Members
Camilla Oliveira
Industry Project Manager

Carina Oliveira
Chemical Engineering Specialist

Denny KS Ng
Professor

Fredric Bauer
Associate senior lecturer inTechnology and society.

Gbemi Oluleye
Research Associate

Heriberto Cabezas
Professor

Agora-Energiewende. Latin
America. Decarbonisation ofindustry.

Jonathan Moncada

Energy Transition Studies, The
Netherlands organisation of
applied scientific research (TNO))

Kok Siew Ng

Heriot-Watt University. Malaysia
Campus. Head, School ofEngineering and Physical Sciences

Peter Levi

IEA (International Energy Agency)
Industry Lead, Energy Technology
Policy Division. France

Researcher at the division on
Environmental and Energy
Systems Studies. Contributing
author to the IPCC Working
Group III AR6 chapter on industry.
Lund University. Sweden.

Robert Adamczyk

EBRD. European Bank of Researchand Development. UK

Department of Chemical
Engineering and the Centre forEnvironmental Policy in the
Faculty of Natural SciencesImperial College London. UK

Thomas Rehm

Researcher

Research Fellow

Associate Director, Senior
Environmental Adviser

Inaugural Chair

Energy Transition Studies, The
Netherlands organisation of appliedscientific research (TNO))
Industrial Innovation (Rutherford).
Principal Investigator of the project
SYNERGORS. Oxford University. UK.

The Climate Solutions CommunityAmerican Institute of Chemical
Engineers- Institute for Sustainability.
USA.

Research Institute of Applied
Earth Science, University ofMiskolc, Miskolc, Hungary,
Hungary.

Adaptation & Resilience (A&R) Group
Dale Sands
Manging Director

Dr Fahim Tonmoy
Associate Principal Engineer

Sands Consulting Solutions.
Expert and advisor- Sustainability,
adaptation and resilience in theindustry. USA.

Kristin Marshall

BMT
Adjunct Research Fellow Griffith
University. Australia.

Rita Ferreira

Appendices - Climate Bonds Initiative

Lux Research Analyst

Sustainable finance
Associate

Associate Research Director at Lux
Research. Expertise assessing climate
risk, adaptation and resilience in thechemical industry. USA
S&P Global
Research analyst with experience inextreme weather impacts in thechemical industry. Portugal

Climate Bonds Initiative - Basic Chemicals Criteria Document
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IWG Members
Andrew Mak,

Carbon Care Asia

Board Member

Armand Satchian,Lux Research Analyst

ISS-ESG

Associate, Sustainable Finance ESG
Consultant

Isobel Edwards,

NN Investment Partners

Green Bonds Analyst

Jana Hock,

Executive Director of Petrochemicals

Jelena Macura,
Head of Sustainable Finance

Rita Ferreira

S&P Global

Sustainable finance Associate

Research analyst withexperience in extreme
weather impacts in thechemical industry. Portugal

Mayur Mukati

Sustainalytics

ShareAction

Sothi Selvam
Director General

CEFIC (European Chemical
Industry Council)

Rakesh Kumar
Officer-Sustainability, Environment &Regulatory Issues

Harsharaj Karangle
Advisor

S Jaikumar
Secretary General

Appendices - Climate Bonds Initiative

Associate Research Director
at Lux Research. Expertiseassessing climate risk,
adaptation and resilience inthe chemical industry. USA

Manager Sustainable Finance Solutions

Research Manager

Frans Stockman,

Kristin Marshall,

ICC (Indian Chemical Council)