THE HYDROPOWER CRITERIAClimate Bonds Standard
What are the Hydropower
Criteria?
The Hydropower Criteria
define the requirementsthat hydropower projects
must meet to be eligible for Climate Bonds
Certification.
This note is an overview of the Criteria.
For full details see the Criteria documents
available on the CBI website.
What underpins the Criteria?
The guiding principle for all sector Criteria
is that certified assets and projects must bein line with limiting global warming in linewith the goals of the Paris Agreement andsupport the climate resilience of the asset.

The Hydropower Criteria specifically thenscreen projects to 1) test their GHG footprint
is in line with decarbonization pathways forthe power sector compatible with delivering
the Paris Agreement, and 2) demonstrate theproject is not having a negative impact on thesurrounding environment or social structures.
Why address Hydropower in the Climate
Bonds Standard?
Hydropower has a prominent position in
many of the world’s major power grids.
According to the World Energy Council,hydropower supplies about 71% of all
renewable energy. In 2019, 15.9% of theworld’s electricity was generated fromhydropower, making it one of the most

Does my project meet the Hydropower Bond Criteria? It’s as easy as 1

significant technologies of the global energy
market. Further, upwards of 90% of energy
storage globally is via pumped storage.
However, some hydropower facilities havebeen associated with significant negativeenvironmental risks and impacts. Ashydropower investors explore climate bonds
to finance projects, it is vital that criteria arein place to ensure projects support climatechange mitigation and climate change
adaptation and resilience.
The Criteria promotes transparency andcredibility for those projects globally thatare low carbon and enable climate change
adaptation.

2 3 4

1. Comply with overarching
Climate Bonds Standard

2. Comply with Mitigation
Criteria

3. Comply with Adaptation& Resilience Criteria

Any bond issuance seeking Climate
Bonds Certification must meet therequirements of the Climate Bonds
Standard.

Generation facilities becoming
operational pre-2020 must have a GHG
footprint of less than 100g CO2e/ kWhor power density greater than 5W/m2.
For facilities becoming operational
during 2020 or after, these thresholds
are 50g CO2e/ kWh and 10W/m2.
Additional criteria apply if it is apumped storage facility.

Each facility must undergo a sitespecific assessment, carried out by
an accredited assessor using the ESG
Gap Analysis Tool. This tool identifies
gaps between the facility’s practices
and industry good practice regarding
environmental and social impacts.
If more than 10 significant gaps areidentified, or more than 2 signficant
gaps in any section assessed, or therequirements related to Free, Priorand Informed consent are not met,
the facility is not deemed eligible useof proceeds for a Certified ClimateBond. Within these limits, for any gaps
identified, an Environmental and Social
Action Plan (ESAP) must be establishedand implemented. There are strict limits
on the timeframes within which thesegaps must be bridged. The Criteria
also require a re-assessment at theconclusion of each Action Plan
to ensure that facilities havebridged the identified gaps.

The overarching Climate Bonds Standard
contains disclosure, management
and reporting requirements.
It is accompanied by asuite of sector specificeligibility Criteria, thatuse of proceeds mustcomply with. Those forhydropower projects aredescribed in Steps 2, 3 & 4.

4. Other requirements
The issuer must publicly disclose theaccredited assessor’s report on theassessment carried out under the ESG
Gap Analysis Tool (and associated ESAP
if required). If not explicitly noted in those
documents, the issuer should also separately
publicly disclose the power density and/GHGor GHG emissions intensity of the facility,
whichever has been used to comply with themitigation component of these Criteria.

Introduction to the Hydropower Criteria Climate Bonds Standard March 2021

ESG Gap Analysis Tool

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What types of hydropower projects arecovered by the Criteria?
The Hydropower Criteria applies to runof-river facilities, impoundment facilities,
pumped storage facilities and related assets
and infrastructure including transmission
lines. Tidal power and other marine
applications are addressed under the Marine
Renewables Sector Criteria.
These Criteria apply to all land-based hydropower
facilities, regardless of type, size or location.
Projects must meet all the components of theCriteria described in Steps 1, 2, 3 and 4 above.
Developed by leaders in the hydropower sector

Meeting Requirements: Climate Mitigation
Decision tree showing steps that determine whether a facility passes or fails the Mitigation
Component of the Hydropower Criteria.
Was the facility operational pre 2020?

Yes

No
Is the power density > 10W/m2?
No
Is the GHG emissions intensity*< 50g CO2e/ kWh?

Yes

Yes

Yes

Yes

Is the power density > 5W/m2?
No
Is the GHG emissions intensity*< 100g CO2e/ kWh?

NoThe Hydropower Criteria were developedwith the input of multiple expert
stakeholders. The Climate Bonds Initiative
convened two groups, a Technical Working
Group (TWG) and an Industry Working
Group (IWG). The TWG developed theCriteria based on their expertise. The IWG
provided feedback on the Criteria proposed.
Full membership details can be found here.

Is the facility a pumped storage facility?

NoYes
Is the facility purposefully built in conjunction
with intermittent renewables?
AND/ OR Contributing to a grid with at least a 20% share fromintermittent renewables OR will increase to this level within thenext 10 years?
No

AND/ OR Not be charged with an off-peak grid intensity thatis higher than the intensity of the electricity that it will displacewhen it is discharged?

NoCannot be certified

Yes
Satisfies Mitigation Criteria
Next step: Adaptation and Resilience Criteria

Meeting Requirements: Adaptation and Resilience

FOR MORE INFORMATION
Check out these documents for more
information:
Hydropower Criteria
Hydropower Background Paper
Hydropower FAQs
Climate Bonds Standard

Disclaimer: The information contained in this communication does
not constitute investment advice in any form and the Climate Bonds
Initiative is not an investment adviser. Any reference to a financialorganisation or investment product is for information purposes
only. Links to external websites are for information purposes only.
The Climate Bonds Initiative accepts no responsibility for content
on external websites. The Climate Bonds Initiative is not endorsing,recommending or advising on the merits or otherwise of any
investment or investment product and no information within thiscommunication should be taken as such, nor should any informationin this communication be relied upon in making any investment
decision. A decision to invest in anything is solely yours. The Climate
Bonds Initiative accepts no liability of any kind, for any investment anindividual or organisation makes, nor for any investment made by thirdparties on behalf of an individual or organisation, based in whole orin part on any information contained within this, or any other Climate
Bonds Initiative public communication. © Climate Bonds Initiative 2021

The facility seeking inclusion in a Certified
Climate Bond must have undergone anassessment under the ESG Gap Analysis
Tool. This analysis must have been carriedout by an accredited assessor. This
assessment will identify any significant
gaps that the facility demonstrates
against international good practice. If
any significant gaps are identified, anEnvironmental and Social Action Plan(ESAP) must be established to address
those gaps including details on how andwhen these gaps will be closed. AND
The approved Climate Bonds Standard
verifier must verify that this assessment
demonstrates:• No more than 10 significant gaps
have been found in total across theassessment. AND• No more than 2 significant gaps havebeen found in any section assessed. AND• None of those gaps would mean that theMitigation Criteria are not met or relate
to the Free Prior and Informed Consentelements of the Assessment AND
Where an ESAP has been necessary toaddress any significant gaps, the approved
Climate Bonds Standard verifier mustverify that the ESAP demonstrates:• The majority (i.e. > 50%) of significant
gaps identified will be closed within 12months; AND• The remaining significant gaps will beclosed within 24 months AND
The issuer commits to re-engage theaccredited assessor to confirm that thesegaps have indeed been closed within thetimeframe(s) specified in the ESAP.

*GHG emissions intensity calculated 1) using the G-res tool or 2) by site-specific assessment following the guidelines laid out in the IEA
Hydro Framework as described in the ‘Guidelines for the Quantitative Analysis of Net GHG Emissions from Reservoirs’. Only reservoir
emissions allocated to the hydropower facility should be counted.										Introduction to the Hydropower Criteria Climate Bonds Standard March 2021

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