FAQs about CBI’s Transport Criteria
Table of Contents
QUESTIONS ON SCOPE ................................................................................................................. 2HOW DOES BUS RAPID TRANSIT (BRT) FIT INTO THESE CRITERIA? ................................................................ 2
ARE THERE CRITERIA FOR AVIATION OR SHIPPING? .................................................................................... 2WHY ARE BIOFUEL VEHICLES EXCLUDED IN THE TRANSPORT CRITERIA? .......................................................... 2CAN BIOFUEL VEHICLES STILL BE ELIGIBLE IF PROVEN TO MEET THE OVERARCHING THRESHOLDS? .......................... 2IS THE FINANCING OF RETROFITS TO PUBLIC TRANSPORT ELIGIBLE? ................................................................ 2QUESTIONS ON MARKET AND FINANCE ........................................................................................ 2DO YOU SEE THESE CRITERIA BEING USED BY THE BOND MARKET? ................................................................. 2DOES CBI VIEW SECURITISATION AS GREEN IF THE BACKED ASSETS ARE GREEN AND/OR THE PROCEEDS FROM THESECURITISATION ARE USED FOR GREEN PURPOSES? ................................................................................... 3THERE ARE OTHER INVESTMENTS THAT CAN MAKE LAND TRANSPORT MORE SUSTAINABLE IN OTHER AREAS (BEYOND
CLIMATE CHANGE). WHY ARE THESE NOT RECOGNISED BY THE CRITERIA? ....................................................... 3WHAT ABOUT LEASING OF VEHICLES OR COMPONENTS?............................................................................. 3CAN ISSUERS USE THE WEIGHTED AVERAGE OF A PORTFOLIO TO MEET THE CERTIFICATION CRITERIA? ..................... 3CAN COVERED BONDS BE CERTIFIED? ..................................................................................................... 3QUESTIONS ON CRITERIA REQUIREMENTS .................................................................................... 4
HOW SHOULD ISSUERS DEMONSTRATE THAT NO MORE THAN 25% OF FREIGHT CARGO IS COMPRISED OF FOSSIL
FUELS? .......................................................................................................................................... 4IS AN INDEPENDENT PROJECT APPRAISAL NEEDED FOR ALL INTERURBAN RAIL PROJECTS? .................................... 4WHAT KIND OF ACTIVITIES CAN BE CERTIFIED IN THE CATEGORY ‘MISCELLANEOUS VEHICLES’? .............................. 4QUESTIONS ON THE THRESHOLDS ................................................................................................ 4WHAT REFERENCE DATA ARE THE EMISSIONS INTENSITY THRESHOLDS BASED ON?............................................. 4WHY DO PASSENGER THRESHOLDS GO TO ZERO IN 2025 WHILE FREIGHT THRESHOLDS DO NOT? .......................... 4IF A TRANSPORT PROJECT OR ACTIVITY HAS BEEN CERTIFIED PREVIOUSLY UNDER VERSION 1 OF THE TRANSPORTCRITERIA, WHAT DOES THIS MEAN NOW VERSION 2 IS OUT? ....................................................................... 5CAN VEHICLE FLEET AVERAGES BE USED TO DEMONSTRATE COMPLIANCE WITH THE EMISSIONS THRESHOLDS? .......... 5QUESTIONS ON THE METRICS ....................................................................................................... 5HOW SHOULD LOADING FACTOR BE ACCOUNTED FOR IN PASSENGER CARS AND COMMERCIAL VEHICLES?................ 5WHY ARE YOU USING TANK-TO-WHEEL METRICS INSTEAD OF WELL-TO-WHEEL METRICS? ................................... 5Questions on ScopeHow does Bus Rapid Transit (BRT) fit into these criteria?
If the project is taking place in a developing country (as defined by the OECD), BRT
systems should be certified under the separate BRT Criteria. However, if the projectis taking place in a developed country, the project needs to meet the requirements of
the Transport Criteria as normal bus systems would.

Are there criteria for aviation or shipping?
Climate Bonds Criteria for Shipping are available to be used for certification. For
Aviation, however, criteria do not yet exist. None the less, it is being looked at closely
as a potential sector to tackle in the future as decarbonisation needs become morepronounced.

Why are biofuel vehicles excluded in the Transport Criteria?
The rationale for excluding biofuel vehicles (that is, vehicles explicitly identified forusing biofuels) is principally practical in nature. Biofuel-powered vehicles can also use
normal fossil fuel (for example, biodiesel trucks can also use normal diesel). Verifying
for the purpose of certification that such vehicles were always using biofuels rather
than fossil fuels would thus be extremely difficult.
This, combined with the fact that various viable alternatives exist for all transportmodes, meant that exclusion of biofuel vehicles was the ultimate TWG decision. Note,however, that many national petrol mixes contain small amounts of biofuels. Vehicles
using such fuel but meeting the relevant criteria here (in other words, not explicitly
claiming to use biofuels) would not be excluded.

Can biofuel vehicles still be eligible if proven to meet the overarching thresholds?
Yes. The main problem is in verifying that a vehicle or fleet of vehicles claiming to beusing biofuels is indeed using biofuel and not diesel instead. However, if it can beproven that the vehicles (for example a small urban bus fleet) would meet theoverarching thresholds with the assumption that they use only fossil fuels, they would
be eligible in the same way a non-biofuel bus would be.

Is the financing of retrofits to public transport eligible?
Yes. Public transport retrofits are automatically eligible for certification.

Questions on Market and FinanceDo you see these criteria being used by the bond market?
Land Transport already represents a significant chunk of Climate Bonds certificationsin the market (around 26% of certified issuance in USD). New York MTA and Sociétédu Grand Paris are the two largest, programmatic issuers of Climate Bonds certified
green bonds, both financing public transport activities. Remember, the CBI Standardand Certification scheme is an additional layer of information which gives investors anindication of whether this bond’s Use of Proceeds are aligned with the ParisAgreement.
The criteria are ambitious, and only the most ambitious assets will be eligible forcertification. But this is precisely the point, we need to be more ambitious if we are totackle climate change. As the technology and market develops, we hope that more
assets will be eligible for certification.

Does CBI view securitisation as green if the backed assets are green and/or theproceeds from the securitisation are used for green purposes?
It is our view that the actual use of proceeds should be green, not necessarily thesecuritised assets. In other words, it is the projects and assets which the proceeds areallocated to that have to pass the requirements of the Standard. While we encourage
the use of green receivables for securitised bonds, it is not a prerequisite.

There are other investments that can make land transport more sustainable in otherareas (beyond climate change). Why are these not recognised by the criteria?
We are primarily concerned with climate change mitigation and adaptation. While
recognising other environmental objectives (such as water, biodiversity, ozone
depletion, etc) these are not within the remit of the CBI Standard and Certification
scheme.
These criteria are applicable to other debt instruments, provided the meet the ClimateBondsStandard.

What about leasing of vehicles or components?
Yes, there is no reason that these criteria could not be applied to certify debt
instruments used to cover leasing of vehicles or dedicated components, provided thatthe vehicle or component meets the criteria.
Unfortunately, given the structure of these criteria, we do not certify debt issued by thelessor of the technology. This will be reviewed as we expand the scope of the CBItaxonomy.

Can issuers use the weighted average of a portfolio to meet the certification criteria?
No, we do not see there being a need to allow for emissions to be averaged across apool of assets. Issuers would have to collect the emissions intensity performance ofeach individual asset in any case so there is no data constraint. Allowing for an
averaging implies that at a certain point in time, there will be a vehicle operating at anemissions intensity level that is not aligned with the Paris Agreement.

Can covered bonds be certified?
Yes, covered bonds can be certified. Provided that the assets to which the proceeds
will be used are compliant with their respective emissions intensity thresholds.
However, we do not require that the pool of assets used as collateral in the coveredbond are compliant with the respective threshold.

Questions on Criteria requirements
How should issuers demonstrate that no more than 25% of freight cargo is comprisedof fossil fuels?
There are three ways an issuer can do this: a) by tonnage: 25% or less of the tonnagetransported is fossil fuels; b) by rolling stock vehicles: 25% or less of the rolling stock
being financed is used to transport fossil fuels; or c) the issuer has authoritative
government sources that state the purpose of the line or rail project is not to transport
fossil fuels.

Is an independent project appraisal needed for all interurban rail projects?
No. This is only needed for new interurban rail projects. If the project being financed
is existing, then this requirement does not need to be met. If new, however, theindependent project appraisal must demonstrate a 25% emissions reduction in thetransport corridor.

What kind of activities can be certified in the category ‘miscellaneous vehicles’?
The manufacture of any miscellaneous vehicle, so long that it is zero direct emissions,is eligible. However, the operation and leasing of miscellaneous vehicles is not in
scope, due to difficulties for issuers in accessing such levels of detail in projects.
One exception to this, however, is zero emission waste collection vehicles. The
manufacture, operation and leasing are all eligible activities.

Questions on the Thresholds
What reference data are the emissions intensity thresholds based on?
Passenger thresholds are based on thresholds in the EU taxonomy on Sustainable
Finance determined from EU emissions data analysis and policy objectives. Thesethresholds were more ambitious than the V1 of the Transport Criteria and thus theTWG decided to align with this best practice.
However, in the absence of new freight thresholds, the Transport Criteria freightthresholds are based on projections and targets set by the Global Fuel Economy
Initiative (GFEI). The GFEI promotes and supports government action to improve theenergy efficiency and reduce the fuel consumption of the road vehicle fleet. At the timeof publication of V1, these GFEI targets were heavily based on and developed usingthe IEA 2 Degrees Scenario (2DS).

Why do passenger thresholds go to zero in 2025 while freight thresholds do not?
As explained for the previous question, more up-to-date analysis on freight thresholds
does not exist. The existing freight thresholds thus remain as the most robust option
available. For extra discussion, it could be said that zero emissions transport forpassenger transport (e.g. rail or electric cars) are much closer viable options than zero
emissions freight (electric trucks, for example).

If a transport project or activity has been certified previously under version 1 of theTransport Criteria, what does this mean now version 2 is out?
If you have issued under V1 of the Transport Criteria, those requirements will still berelevant for the lifetime of the bond. Certification will not be stripped if the bond would
now not meet the requirements of V2.
However, if the bond matures and you want to re-certify a new bond financing thesame activity, this will need to meet the requirements in V2.

Can vehicle fleet averages be used to demonstrate compliance with the emissions
thresholds?
No. When meeting the criteria thresholds, each vehicle must be compliant. Whether
financing the manufacturing of vehicles or operation of a fleet of vehicles, each mustmeet the threshold. If this was not the case, this would imply that some vehicles areoperating at an emissions intensity level that is not aligned with the Paris Agreement.

Questions on the Metrics
How should loading factor be accounted for in passenger cars and commercial
vehicles?
The load factor for passenger cars or commercial vehicles is factored in slightly
differently than for public transport (e.g. buses or trains) or rail freight. For passenger
cars and commercial vehicles, the load factor should always be taken as one
passenger per vehicle in line with the Worldwide Harmonised Light Vehicle Test
Procedure (WLTP), or other similar emissions testing procedures. The threshold
metric for cars and commercial vehicles can therefore be taken in practice also asgCO2/km.
As such there is no need to calculate average ridership, for example.

Why are you using tank-to-wheel metrics instead of well-to-wheel metrics?
Well-to-wheel metrics have their benefits. however, such metrics are currentlyunavailable. the CBI Criteria require measurement, not estimation of emissions. suchmeasurement is not currently available for the upstream emissions associated withthe different energy systems that the transition will require. That said, the Transport
Criteria will be reviewed on a biennial basis and we look forward to incorporating amore robust metric.