Land Transport Criteria
Version 2

Development of Eligibility Criteria
under the Climate Bonds Standard & Certification Scheme

August 2022

Prepared by Chris Moore, Justine Leigh-Bell & Helen Jackson

Climate Bonds Initiative Land Transport Background Document

Document revision number

Date

Summary of changes

2.1 Clarified threshold years

Aug 2022

2. Formal update to criteria

Oct 2020

Clarification of years new thresholds areapplicable. I.e., passenger transport thresholds
become zero from 2026 onwards.
Clarification that Hydrogen vehicles are eligible
as opposed to Biofuel vehicles.
Lowering passenger transport emissions
thresholds, lower acceptable percentage of rail
freight being fossil fuels (now 25%), clearer
exclusions of biofuel and fossil fuel vehicles,
clarify fossil fuel transport exclusions, inclusionof zero emissions supporting vehicles in othersectors, clearer requirements for emissions
reductions for new interurban rail, addition ofcoaches into scope, and changes to layout toalign with other sector criteria.

1. First publication of original
Criteria

Feb 2016

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Climate Bonds Initiative Land Transport Background Document

Definitions
Climate Bonds Initiative (CBI): An investor-focused not-for-profit organisation, promoting large-scale
investments that will deliver a global low carbon and climate resilient economy. The Initiative seeks to develop
mechanisms to better align the interests of investors, industry and government so as to catalyse investments
at a speed and scale sufficient to avoid dangerous climate change.
Climate Bond: A climate bond is a bond used to finance – or re-finance - projects needed to address climatechange. They range from wind farms and solar and hydropower plants, to rail transport and building sea walls
in cities threatened by rising sea levels. Only a small portion of these bonds have been labelled as green or
climate bonds by their issuers.
Certified Climate Bond: A Climate Bond that is certified by the Climate Bonds Standard Board as meeting therequirements of the Climate Bonds Standard, as attested through independent verification.
Climate Bonds Standard (CBS): A screening tool for investors and governments that allows them to identify
green bonds where they can be confident that the funds 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 (Climate Bonds Standard v2.1) and a suite of sector specific eligibility Criteria.
The parent standard covers the certification process and pre- and post-issuance requirements for all certified
bonds, regardless of the nature of the capital projects. The Sector Criteria detail specific requirements for
assets identified as falling under that specific sector. The latest version of the CBS is published on the Climate
Bonds Initiative website
Climate Bonds Standard Board (CBSB): A board of independent members that collectively represents $34
trillion of assets under management. The CBSB is responsible for approving i) Revisions to the Climate Bonds
Standard, including the adoption of additional sector Criteria, ii) Approved verifiers, and iii) Applications for
Certification of a bond under the Climate Bonds Standard. The CBSB is constituted, appointed and supported
in line with the governance arrangements and processes as published on the Climate Bonds Initiative 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 Climate Bonds Standard Board is satisfied thebond conforms with the Climate Bonds Standard.
Green Bond: A Green Bond is where proceeds are allocated to environmental projects. The term generally
refers to bonds that have been marketed as “Green”. In theory, Green Bonds proceeds could be used for awide variety of environmental projects, but in practice they have mostly been the same as Climate Bonds, withproceeds going to climate change projects.
Transport assets and projects: Assets and projects relating to the production of private and / or public vehicles,
and / or the development of associated infrastructure, logistics and ICT.
Technical Working Group (TWG): A group of key experts from academia, international agencies, industry andNGOs convened by the Climate Bonds Initiative. The TWG develops the Sector Criteria - detailed technicalcriteria for the eligibility of projects and assets as well as guidance on the tracking of eligibility status during theterm of the bond. Their draft recommendations are refined through engagement with finance industry experts
in convened Industry Working Groups and through public consultation. Final approval of Sector Criteria isgiven by the CBSB.
Industry Working Group (IWG): A group of key organisations that are potential issuers, verifiers and investors
convened by the Climate Bonds Initiative. The IWG provides feedback on the draft sector Criteria developedby the TWG before they are released for public consultation.

The Climate Bonds Initiative gratefully acknowledges the Technical Working Group members who
supported the development of these Criteria. Members are listed in Appendix 1.

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Climate Bonds Initiative Land Transport Background Document

Table of Contents
Definitions .......................................................................................................................................... 0
Table of Contents............................................................................................................................... 2
1

Introduction ................................................................................................................................ 1
1.1
Overview.............................................................................................................................. 1
1.2
Funding needs of a low-carbon and climate resilient economy ............................................ 1
1.3
Green bonds are critical to mobilising the capital required ................................................... 2
1.4
Introduction to Climate Bonds Initiative and the Climate Bonds Standard ............................ 3
1.5
Process for Sector Criteria Development ............................................................................. 4
1.6
Revisions to these Criteria ................................................................................................... 4

2

Sector Overview ......................................................................................................................... 5
2.1
What are Transport assets? ................................................................................................. 5
2.2
Transport and climate change .............................................................................................. 6
2.3
Climate targets and transition trajectory ............................................................................... 8
2.4
Investment need .................................................................................................................. 9
2.5
Bonds in the sector ............................................................................................................ 10

3

Principles and Boundaries of the Sector Criteria ...................................................................... 12
3.1
Guiding principles .............................................................................................................. 12
3.1.1 Eligibility based on quantitative emissions reductions ........................................................ 12
3.1.2 Technology agnostic .......................................................................................................... 13
3.1.3 Carbon offsets ................................................................................................................... 13
3.2
Assets in Scope ................................................................................................................. 13
3.3
Assets out of Scope ........................................................................................................... 17
3.3.1 Fossil fuel vehicles and supporting infrastructure ............................................................... 17
3.3.2 Dedicated fossil fuel rail transport ...................................................................................... 17
3.3.3 Other emissions out of scope ............................................................................................. 17
3.4
Alignment with other Sector Criteria ................................................................................... 18
3.4.1 Forestry (vehicles and roads)............................................................................................. 19
3.4.2 Infrastructure – Buildings ................................................................................................... 19
3.4.3 Renewable energy production for powering electrified transport ........................................ 20
3.4.4 Shipping............................................................................................................................. 20

4Discussion and Eligibility Criteria .............................................................................................. 21
4.1
Overarching issues and considerations.............................................................................. 21
4.1.1 The overarching principles of the Transport Criteria ........................................................... 21
4.1.2 Ambitious mitigation of GHG emissions and decoupling transport emissions from economic
growth .......................................................................................................................................... 21
4.1.3 Dynamic systems increase the difficulty of estimating absolute emissions savings ............ 22
4.1.4 Decarbonisation of the transport sector requires more than incremental change ............... 23
4.1.5 Potential for radical decarbonisation is dependent on broader climate policy ..................... 23
4.1.6 Low carbon infrastructure which maintains high fossil fuel consumption patterns .............. 24
4.1.7 Metrics and load factors ..................................................................................................... 24
4.1.8 Rationale for universal threshold metric ............................................................................. 25
4.1.9 Reliability of private vehicle emissions data ....................................................................... 25
4.1.10 Scope of emissions ........................................................................................................ 26
4.1.11 Exclusion of biofuel vehicles in the Transport Criteria ..................................................... 27
4.1.12 Inclusion of Hydrogen in the Transport Criteria ............................................................... 28
4.1.13 Decarbonising road freight ............................................................................................. 29
4.1.14 Fleet averages for emissions and meeting the thresholds .............................................. 29
4.1.15 Bus Rapid Transit ........................................................................................................... 30
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Climate Bonds Initiative Land Transport Background Document

4.1.16 Interurban scheduled road transport ............................................................................... 30
4.1.17 Dedicated fossil fuel rail transport – accuracy of percentages ........................................ 30
4.1.18 Information and Communication Technology (ICT) assets ............................................. 31
4.2
Definitions and key terms ................................................................................................... 31
4.3
Overarching issues and considerations (Version 2 update)................................................ 32
4.3.1 Principles of updating Climate Bonds sector criteria........................................................... 32
4.3.2 Updating the emissions thresholds in the Transport Criteria .............................................. 32
4.3.3 Freight thresholds in the Transport Criteria ........................................................................ 34
4.3.4 Dedicated rail transport of fossil fuels................................................................................. 34
4.3.5 Inclusion of zero direct emissions vehicles from other sectors ........................................... 34
4.3.6 Incorporating scope 2 and scope 3 emissions into the Transport Criteria........................... 35
4.3.7 Mining and minerals ........................................................................................................... 36
4.3.8 Disclosure of transport compliance data ............................................................................ 36
4.4
Mitigation Requirements .................................................................................................... 36
4.4.1 Automatic eligibility ............................................................................................................ 36
4.4.2 Universal emissions thresholds .......................................................................................... 37
4.4.3 Exclusion of dedicated fossil fuel transport ........................................................................ 39
4.4.4 Exclusion of biofuel vehicles .............................................................................................. 39
4.4.5 Independent project appraisals for new interurban rail transport ........................................ 39
4.5
Decision trees for asset categories .................................................................................... 41
4.5.1 Passenger cars and commercial vehicles .......................................................................... 41
4.5.2 Public passenger transport by road.................................................................................... 42
4.5.3 Freight transport by road .................................................................................................... 43
4.5.4 Passenger rail rolling stock ................................................................................................ 44
4.5.5 Railway networks and freight rail rolling stock .................................................................... 45
4.5.6 Miscellaneous vehicles for other sectors ............................................................................ 46
4.5.7 Infrastructure for low carbon transport................................................................................ 46
4.6
Reporting requirements ..................................................................................................... 47
Appendix 1: TWG members ............................................................................................................. 48
Appendix 4: References ................................................................................................................... 48

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Climate Bonds Initiative Land Transport Background Document

1 Introduction
1.1

Overview

This Background Document serves as a reference document to the Criteria Document for the Land
Transport Criteria (hereafter referred to as simply the Transport Criteria). The purpose of the
Background Document is to provide an overview of the key considerations and issues that were raised
during development of the Transport Criteria1.
The Criteria are generally developed through a consultative process with Technical Working Groups(TWGs) and Industry Working Groups (IWGs), and through public consultation. The TWGs compriseacademic and research institutions, civil society organizations, multilateral banks and specialist
consultancies whereas IWGs are represented by industry experts including potential bond issuers andinvestors. A period of public consultation offers the opportunity to any member of the public to commenton the Criteria. This document aims to capture these various dialogues and inputs and substantiate
the reasoning behind the Transport Criteria. It should be noted that, prior to this process being thestandard procedure and in the case of the Transport Criteria, only a TWG was convened, followed bya period of public consultation.
This Background Document begins with an introduction to the challenges in financing a low carbon
and climate resilient world and the role that bonds can play in meeting this challenge, particularly
through the standardisation of green definitions. This is followed by Section 2, which introduces thetransport sector and the implications of climate change on the sector in terms of both emissions andclimate risks. Section 3 explains the principles and boundaries of Transport Criteria development.
Section 4 synthesizes the discussions arising from the TWGs and public consultation and presents
the resulting Criteria.
Supplementary information available in addition to this document include:
1. Transport Criteria Brochure: a 2-page summary of the Transport Criteria.
2. Transport Criteria Document: the complete Criteria requirements.
3. Climate Bonds Standard V3: the umbrella document laying out the common requirements that all
Certified Climate Bonds need to meet, in addition to the sector-specific Criteria (V2.1 is the mostrecent update version).
4. Climate Bonds Standard & Certification Scheme Brochure: an overview of the purpose, context
and requirements of the Climate Bonds Standard & Certification Scheme.
For more information on the Climate Bonds Initiative and the Climate Bonds Standard & Certification
Scheme, see https://www.climatebonds.net/standard. For the documents listed above, see
https://www.climatebonds.net/standard/transport

1.2

Funding needs of a low-carbon and climate resilient economy

The current trajectory of climate change, expected to lead to global warming of 3.1-3.7°C by 21002,
poses an enormous threat to the future of the world’s nations and economies. The effects of climatechange and the risks associated with a greater than 2ºC rise in global temperatures by the end of the1
2

Please note that the document does not include water-based transport or aviation.
According to Climate Tracker, under current policies we could expect 3.1-3.7ºC: http://climateactiontracker.org/global.html

1Climate Bonds Initiative Land Transport Background Document

century are significant: rising sea levels, increased frequency and severity of hurricanes, droughts,
wildfires and typhoons, and changes in agricultural patterns and yields. Avoiding such catastrophic
climate change requires a dramatic reduction in global greenhouse gas emissions.
To ensure sustainable development and halt climate change, all future infrastructure, both built andnature-based, needs to be low-carbon and resilient to climate change, without compromising the kindof economic growth needed to improve the livelihoods and wellbeing of the world’s most vulnerable
citizens. Global infrastructure investment is expected to amount to USD 90 trillion over the next 15
years, which is more than the entire current infrastructure stock.3
Ensuring that the infrastructure built is low-carbon raises the annual investment needs by 3–4%.4
Climate adaptation needs add another significant amount of investment, which is estimated at USD
280–500 billion per annum by 2050 for a 2ºC scenario.5
According to the Task Force on Climate-related Financial Disclosures (TCFD), there are two broadchannels through which climate change can present risks to business activities and assets 6:
1. Physical risk: the risk of impacts from climate- and weather-related events, such as floods andstorms that damage property or disrupt supply chains and trade;
2. Transition risk: the financial risks that could result from the process of adjustment towards alower-carbon economy. These include sudden shifts in demand; legal risk due to parties who
have suffered loss or damage seeking compensation; and changes in policy favouring lower
carbon technologies.
These could prompt a reassessment of the value of a large range of assets as costs and opportunities
become apparent, and widespread inadequate information on these risks could even threaten thestability of the financial system. Risks to financial stability will be minimised if the transition to a low
carbon and climate resilient economy begins early and follows a predictable path, thereby helping themarket anticipate a smooth transition to a 2ºC warming world.

1.3

Green bonds are critical to mobilising the capital required

Traditional sources of capital for infrastructure investment, such as governments and commercial
banks lending, are insufficient to meet capital requirement needs to 2030. Institutional investors,
particularly pension and sovereign wealth funds, are increasingly looked to as viable actors to fill thesefinancing gaps.
Capital markets enable issuers to tap into large pools of private capital from institutional investors.
Bonds are appropriate investment vehicles for these investors as they are low-risk investments withlong-term maturities, making them a good fit with institutional investors’ liabilities (e.g. pensions to be
paid out in several decades).
Bond financing works well for low-carbon and climate-resilient infrastructure, particularly forrefinancing projects and assets post-implementation, as capital markets also facilitate risk
3

New Climate Economy (2016). Better Growth, Better Climate.
New Climate Economy (2016). The Sustainable Infrastructure Imperative: Financing for Better Growth and Development.
UNEP (2016). The Adaptation Finance Gap Report.
6
TFCD’s ‘Recommendations of the Task Force on Climate-related Financial Disclosures’: https://www.fsb-tcfd.org/publications/finalrecommendations-report/
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Climate Bonds Initiative Land Transport Background Document

management. Across investors and financial markets, different entities face different types andseverities of risks related to climate change, depending on many factors including degree of long-term
exposure, likelihood of negative climate impacts, and ability to mitigate impacts or shift positions.
Bonds offer relatively stable and predictable returns, and long-term maturities. This makes them agood fit with institutional investors’ investment needs. Labelled green bonds are bonds with proceeds
used for green projects, mostly climate change mitigation or adaptation projects, and labelledaccordingly. The rapid growth of the labelled green bond market has shown in practice that the bondmarkets provide a promising channel to finance climate investments. 7
The green bond market can reward bond issuers and investors for sustainable investments that
accelerate progress toward a low carbon and climate resilient economy. Commonly used as long-term
debt instruments, green bonds are issued by governments, companies, municipalities, commercial
and development banks to finance or re-finance assets or activities with environmental benefits. Greenbonds are in high demand and can help issuers attract new types of investors.
Green bonds are regular bonds with one distinguishing feature: proceeds are earmarked for projects
with environmental benefits, primarily climate change mitigation and adaptation. A green label is a
discovery mechanism for investors. It enables the identification of climate-aligned investments withlimited resources for due diligence. By doings so, a green bond label reduces friction in the markets
and facilitates growth in climate aligned-investments.
However, currently green bonds account for less than 0.2% of the global bond market, withapproximately USD 380 billion8 of green bonds outstanding, compared to the global bond market of
USD 100 trillion. The potential for scaling up is tremendous. The market now needs to grow muchbigger, and quickly.

1.4

Introduction to Climate Bonds Initiative and the Climate Bonds Standard

The Climate Bonds Initiative is an investor-focused not-for-profit organisation whose goal is to promotelarge-scale investments through green bonds and other debt instruments to accelerate a global
transition to a low-carbon and climate-resilient economy.
Activating the mainstream debt capital markets to finance and refinance climate-aligned projects andassets is critical to achieving international climate goals, and robust labelling of green bonds is a key
requirement for that mainstream participation. Confidence in the climate objectives and the use offunds intended to address climate change is fundamental to the credibility of the role that green bonds
play in a low carbon and climate resilient economy. Trust in the green label and transparency to theunderlying assets are essential for this market to reach scale but investor capacity to assess green
credentials is limited, especially in the fast-paced bond market. Therefore, the Climate Bonds Initiative
created Climate Bonds Standard & Certification Scheme, which aims to provide the green bond market
with the trust and assurance that it needs to achieve scale.
The Climate Bonds Standard & Certification Scheme is an easy-to-use tool for investors and issuers
to assist them in prioritising investments that truly contribute to addressing climate change, both froma resilience and a mitigation point of view. It is made up of the overarching Climate Bonds Standard
detailing management and reporting processes, and a set of Sector Criteria detailing the requirements
assets must meet to be eligible for certification. The Sector Criteria covers a range of sectors including
solar energy, wind energy, marine renewable energy, geothermal power, low carbon buildings,
forestry, and water. The Certification Scheme requires issuers to obtain independent verification, preand post-issuance, to ensure the bond meets the requirements of the Climate Bonds Standard.
See Climate Bonds Initiative’s ‘State of the Market’ Report for more information: https://www.climatebonds.net/resources/reports/bondsand-climate-change-state-market-2017
8
Source: Climate Bonds Initiative (June 2018)
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Climate Bonds Initiative Land Transport Background Document

1.5

Process for Sector Criteria Development

The Climate Bonds Standard has been developed based on public consultation, road testing, review
by the assurance roundtable and expert support from experienced green bond market actors. The
Standard is revisited and amended on an annual basis in response to the growing green bond market.
Sector specific Criteria, or definitions of green, are developed by TWGs, made up of scientists,
engineers and technical specialists. Draft Criteria are presented to IWGs before being released for
public comment. Finally, Criteria are presented to the Climate Bonds Standard Board for approval (seediagram below).

TWG
establishedIWG
established

Research & Development Phase

Draft Criteria released
for public consultation

Climate Bonds Standard
Board reviews

Review Phase

TWG & IWG
meetings to discussand advise on criteria

Approval

TWG revisit criteria
in light of public
consultation

Climate Bonds
Certifications
Market Use

Criteria approvedby the Board andreleased

Regular TWG
review of Criteria

Figure 1: process for developing Climate Bonds Standard Sector Criteria

To date, Sector Criteria for wind, solar, geothermal, marine renewables, forestry, water, buildings,
bioenergy, waste management, protected agriculture and shipping are available for certification.
Sector Criteria for hydropower and agriculture are under development. Working groups for energy
transmission & distribution and desalination will be launched soon.

1.6

Revisions to these Criteria

As part of the Climate Bonds Initiative's goal to accelerate a global transition to a low-carbon, resilient
economy, the Transport Criteria seek to maximize viable bond issuances with verifiable environmental
outcomes. This guidance should be recognised as the first set of sector-specific guidance for thetransport sector. All groups and individuals involved recognise the breadth and complexity of this
sector and emphasise that this guidance should be a foundation on which to encourage increasedtransparency and consistency in application of scientific best practices and data in the context of bondissuances. Note that Climate Bonds Initiative expects that the Transport Criteria may be refined overtime. However, any approvals given will not be removed or changed retroactively. These eligibility
criteria should be recognised as a starting point.
These Criteria have now been reviewed once after their initial launch, with the TWG taking stock ofissuances that arise in the early stages and any developments in improved methodologies and datathat can increase the climate integrity of future bond issuances. This is therefore the second iterationof the Transport Criteria (V2). After this first review, the Criteria will be reviewed again on a needs
basis as technology and the market evolves. As a result, the Criteria are likely to be refined over time,
as more information becomes available.

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Climate Bonds Initiative Land Transport Background Document

2 Sector Overview
2.1

What are Transport assets?

Investments in the transport sector are ‘real asset’ investments (i.e. they are physical assets that havea value due to their substance and properties). Transport related assets are featured in institutional
investor allocations. These types of investments occur globally and are essential components of mosteconomies, particularly in developed economies, where transport related sectors are key contributors
to national economies, state budgets and employment. Appropriate and responsible investments inthe transport sector can help developed and emerging economies transition to more sustainablegrowth pathways, especially where these investments help to increase adaptive capacity andresilience to climate change. Generally, investor interest in these sectors is likely to increase due tofundamental drivers such as the need to facilitate trade and meet demands for social mobility in linewith economic development and population growth, while equally meeting the Paris goals andSustainable Development Goals (SDGs).
In terms of assets/projects likely to be suitable for bond issuance, the following areas are most likely
to be relevant, but not limited to:• Vehicle technologies
a. To significantly increase emissions efficiency (including fuel efficiency, fuel type andother vehicle improvements);
b. New technologies and hybridisation. The growth in e-mobility, the introduction of awider number of hybrid vehicles and autonomous/semi-autonomous vehicles over the
past five years has been significant.
• Transport infrastructurea. All modes of collective/mass transport and its infrastructure, especially urban rail and
Bus Rapid Transport (BRT);
b. New developments in public transport such as ropeways and cable cars;c. Alternative (low carbon) energy refuelling distribution infrastructure;d. National transport infrastructure to reduce transport emissions and fulfil national climatechange commitments.
• System improvements and technologies that encourage overall efficiency (high load,
occupancy and flow);a. Technologies that allow new behaviour (such as qualifying vehicle car pool clubs, bikesharing)b. Better integration of all types of transport.
The assets and projects that we expect to see as use of proceeds in green bonds seeking Certification
through the Transport Criteria fall into the following areas:
•
•
•
•
•
•
•
•
•

Passenger rail transport (interurban)
Freight rail transport
Public transport
Infrastructure for low carbon transport
Passenger cars and commercial vehicles
Freight transport by road
Associated components for low carbon private vehicles
Interurban scheduled road transport
Supply chain facilities, such as manufacturing facilities or depots

The scope of the assets covered by the Transport Criteria is fully discussed in section 3.2.
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Climate Bonds Initiative Land Transport Background Document

2.2

Transport and climate change

Transport is the second largest contributor to global GHG emissions after electricity generation,
responsible for 23% of all energy-related CO2 emissions globally and 14% of total GHG emissions9.
Road transportation for passengers and freight remains the primary source of emissions in the sector,
responsible for 73% of CO2 emissions from all transport10.
According to the 2017 edition of IEA’s Energy Technology Perspectives, emissions from transport
increased by 2.5% annually between 2010 and 2015 and continue to grow. Emissions from transport
need to peak and begin to decrease rapidly if the sector is to become 2 degree compatible. In theabsence of effective mitigation policies, transport emissions could increase at a faster rate thanemissions from the other energy end-use sectors and reach around 12 Gt CO2eq/yr by 2050 11 .
Mitigation measures in the transport sector can take the following major forms:•

Reduced GHG emissions;•

Increased GHG emission efficiency (i.e. fewer GHGs emitted per unit of production), and;•

Displacement of more carbon-intensive modes of transport (e.g. internal combustion engine
vehicles).

Transport infrastructure is a key driver of transport behaviour and choice. Transport investments cantherefore lock in a high carbon transport future if the assets and activities invested in are not alignedwith a low carbon future. Scaling up and shifting investment towards low carbon transport infrastructure
will subsequently lock in a low carbon transport future.
As well as the aspect of transport infrastructure lock in, the extent of low carbon technology
development across transport modes varies considerably. Certain modes, such as electrified railtransport, are already associated with relatively low carbon emissions (particularly if powered from agrid with a high percentage of renewable sources). This contrasts with modes such as road freighttransport via Heavy Goods Vehicles for which achieving low carbon emissions is much morechallenging. There is added complexity in financing transport infrastructure investments because
transport investments are highly tied to national policies and commitments, as well as geographicalsuitability for a given mode of transport. It is important to thus recognise where benefits can be fully
reached when incentivising investment in low carbon transport. Transport assets, activities andinfrastructure also have strong implications for adaptation and resilience efforts and importance forenvironmental integrity (e.g., biodiversity, soil carbon and watershed functioning).
Ridership is also critical in determining per p-km public transport emissions; all else being equal, busy
routes have lower emissions per p-km than fairly empty ones.

9

Sims R. et al. (2014) Transport. In: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change
10
REFERENCE
11
Sims R. et al. (2014) Transport. In: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change

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Climate Bonds Initiative Land Transport Background Document

Table 1: Comparison of different estimates of emissions from transport modes.

Transport typeRail estimates
All rail, metro, tram
Light rail
MetroIntercity rail
High-speed rail
Rail freight
Road comparisons
All road passenger
HGV road freightSource of estimate

Emissions scope

Estimate range

IPCC (2014)12
IEA (2012)13
IEA (2012)
IEA (2014)14
IEA (2014)
IEA (2014)

Scope 1 + 2
unspecified
unspecified
Scope 1
Scope 1
Scope 139-1091 gCO2/p-km
4-22 gCO2/p-km
3-21 gCO2/p-km
6 gCO2/p-km
0 gCO2/p-km
8 gCO2/t-km

IEA (2014), IPCC (2014)
IEA (2014), IPCC (2014)

Scope 1
Scope 180-221 gCO2/p-km
70-768 gCO2/t-km

Notes: 1 The upper limit for this figure presumably incorporates Scope 2 emissions from countries withrelatively fossil-fuel intensive grids.

Table 2. Sources of variation among transport investments.
Sources of variation
Complexity

•
•
•
•

Essential components such as training, infrastructure (e.g., storage,
maintenance), information systems (e.g., traffic coordination), inputs (e.g.
refrigerants in freight logistics), and technologies
Experience, capability, and suitability in different regions
Potential impacts on social issues (in particular social mobility) andbiodiversity
Reliance on public support or policy changes

Financialviability andcosteffectiveness••

Execution costs, including design and impact monitoring
Ease and costs of monitoring activities, outcomes, and revenue and benefit
flows

Evidence base•

Available scientific information about the anticipated GHG reduction fordifferent transport infrastructure activities

While the mitigation potentials of different modes of transport are well understood, accurately
determining whether transport assets and activities are compatible with a 2 degree or lower warming
scenario is partially influenced by the availability of data for setting targets and thresholds. Since thefirst iteration of the Climate Bonds Transport Criteria, for example, EU legislation has been passed in2017 that ensures more accurate emissions values for light vehicles within the EU (the Worldwide
Harmonised Light Vehicle Test Procedure). Moreover, in June 2018, the EU Council adopted
monitoring and reporting rules of CO2 emissions as well as fuel consumption of new heavy-duty
vehicles. While this ensures that investments aimed at low carbon transport can be more dependable,
this standard does not stretch to other regions of the globe. This is reflected in many countries’
Nationally Determined Contributions (NDCs), where transport-related emissions are not strongly
monitored. Equally, even in a scenario where all countries successfully implemented their NDCs,
12

Sims et al. (2014) ibid.
IEA Energy Technology Perspectives 201214
IEA Energy Technology Perspectives 201413

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Climate Bonds Initiative Land Transport Background Document

multiple studies suggest this would not result in averting climate change below 2 degrees 15 .
Nonetheless, trends in transport technologies and efficiencies may not differ too greatly in theirdevelopment and financing.

2.3

Climate targets and transition trajectory

Climate mitigation in the land transport sector is strongly linked to switching to zero-emission fuelsources (such as electrified transport), improving vehicle fuel use efficiency and modal shift. In the UK,
for example, the Committee on Climate Change (CCC) projected that a scenario of improving
efficiency of conventional vehicles, a shift to ultra-low emissions vehicles (e.g. plug-in hybrid electricvehicles) and some moderation of demand growth could result in a 34% decrease in domestictransport emissions by 2030, compared to 1990 levels16.
Bloomberg NEF estimated that electrifying the transport sector in European countries such as the UK
and Germany could lead to a 55% emissions reduction between 2020 and 2050 17 . In the USA,
meanwhile, transport electrification may account for 25% of the emissions reductions that would comefrom halving US energy use with energy efficiency measures18.
Improvements to vehicle fuel efficiency as a key element to transport decarbonisation can be framed
as a ‘low-hanging fruit’ option that is attractive to both industry and policy-makers as it also means
lower fuel costs. The Global Fuel Economy Initiative (GFEI) calculated that a 50% improvement inaverage vehicle fuel economy by 2050 is a realistic and cost-effective target. Moreover, this target
could account for roughly a third of the CO 2 reductions needed for motorised passenger transport toalign with a 2 degrees emission trajectory19.
Modal shift (such as a shift to passenger and freight transport by rail) alone has the potential to reduce
EU transport GHG emissions over land by about 20% from 1990 levels by 2050, for example, if global
best practice is adopted across rail20. A more recent model, again for an EU context, suggests that
increasing rail freight modal share from 18% to 23% in the EU could reduce land freight emissions by
4% by 2050 compared to a business-as-usual scenario but from a 2000 baseline21. See Table 1 for an
overview of different transport mode emissions.
As of 2019, only one in five of the National Climate Plans (NDCs) submitted by countries as part of
the Paris agreement contain quantified mitigation targets for transport22. Outside of this unencouraging
progress in an international context, clearer binding targets can be found in some national contexts
but are nonetheless too few and far between. The UK government aim to end domestic transport
emissions by 205023, Canada has adopted sales targets for zero-emissions passenger vehicles of 10%
by 2025, 30% by 2030 and 100% by 204024. China’s national government has been actively reducing
the fuel intensity of road transport, with a new fuel standard implemented for light duty trucks in 2018,

Harmsen et al. (2019). Taking some heat off the NDCs? The limited potential of additional short-lived climate forcers’ mitigation.
Available from: https://link.springer.com/article/10.1007/s10584-019-02436-3
16https://www.theccc.org.uk/wp-content/uploads/2013/12/1785b-CCC_TechRep_Singles_Chap5_1.pdf
17
https://data.bloomberglp.com/professional/sites/24/BNEF-Sector-Coupling-Report-Feb-2020.pdf
18
https://www.aceee.org/research-report/u1907
19
GFEI (2015) Fuel Economy State of the World 2016: Time for Global Action. Global Fuel Economy Initiative, London
http://www.globalfueleconomy.org/media/203446/gfeistate-of-the-world-report-2016.pdf
20
Nelldal, B.L. and Andersson, E., 2012. Mode shift as a measure to reduce greenhouse gas emissions. Procedia-Social and Behavioral
Sciences, 48, pp.3187-3197.
21https://www.transportenvironment.org/newsroom/blog/freight-modal-shift-rail-can-contribute-decarbonising-land-freight22
https://www.wri.org/blog/2019/10/everything-you-need-know-about-fastest-growing-source-global-emissions-transport
23
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/878642/decarbonising -transportsetting-the-challenge.pdf
24https://climateactiontracker.org/countries/canada/
15

8

Climate Bonds Initiative Land Transport Background Document

and planned standards coming into effect for passenger vehicles in 2020 and heavy-duty vehicles in202125. It also has in place a freight transport modal shift policy in effect since 201626.
According to the IEA27, global transport emissions increased by less than 0.5% in 2019 (comparedwith 1.9% annually since 2000) owing to efficiency improvements, electrification and greater use of
biofuels. However, to follow a sustainable development trajectory, emissions in transport need to peakas soon as possible. Energy intensity must drop by 3.2% on average annually from 2020 to 2030 –more than double the annual average rate of decrease since 2000 – to put transport efficiency on trackwith its sustainable development scenario. For the transport sector to meet projected mobility andfreight demand while reversing CO2 emissions growth, energy efficiency measures – including modal
shift and reducing overall motorised vehicle activity – will thus need to be deployed to greater andmaximum effect.

2.4

Investment need

According to the Climate Policy Initiative, USD 3 trillion per year of investment will be required between
2015 and 2035 to increase the ability of new and existing transport systems to be compatible with a 2
degree (2DS) warming scenario (in addition to existing transport investments of roughly USD 1-2
trillion per year)28. The IEA meanwhile estimates a far higher figure of USD 751 trillion in investment
required between 2017 and 2060 to meet a 2DS or a ‘below 2 degrees’ (B2DS) warming scenario 29.
Per year this comes to roughly USD 17.5 trillion. This is considerably lower than the estimatedinvestment need for the transport sector in a business-as-usual (BAU) scenario (USD 860 trillion
between 2017 and 2060) 30 . WRI also provides estimates of required investment in transport
infrastructure of USD 2 trillion per year until 2050 in order to meet a 2DS warming scenario.
Global annual transport investments are estimated to lie between USD 1.4 and 2.1 trillion 31. Taken
alongside the amount of outstanding climate-aligned transport bonds as of 2019 of USD 509 billion32(though these figures may likely have both increased since) and a further USD 80 billion-worth of
Climate Bonds certified transport bonds, current investment flows are insufficient to meet low carbon
transport infrastructure needs. Table 3 describes some of the potential bond types that could be used
to finance sustainable transport measures.
In 2010, public sector investment represented 42% of global transport investment 33. As such, transport
investment is closely tied to government policy for domestic transport, as well as multilateral initiatives
such as the European TEN-T (Trans-European Transport Network). In China, for example, electricvehicle (EV) owners receive tax exemptions from the government while in some European countries
there are existing subsidies for electric bikes34. With the other 58% of investment coming from theprivate sector, government policy can facilitate the channelling of private finance into sustainabletransport projects. Public-private partnerships (PPPs) are one way of linking private finance to largescale public infrastructure projects. An example of this includes a US$6.8 billion high-speed railway(HSR) project in China35, reflective of the Chinese government’s push for a shift to both passenger rail
and rail freight.
25

https://climateactiontracker.org/countries/china/
Chen, S., Wu, J. and Zong, Y., 2020. The Impact of the Freight Transport Modal Shift Policy on China’s Carbon Emissions
Reduction. Sustainability, 12(2), p.583.
27
https://www.iea.org/reports/tracking-transport-2020
28
CPI 2014: https://climatepolicyinitiative.org/wp-content/uploads/2014/10/Moving-to-a-Low-Carbon-Economy-The-Financial-Impact-ofthe-Low-Carbon-Transition.pdf
29
The IEA analysis includes shipping and aviation investments, but this comprises a small part of the investment need.
30
IEA ETP 2017: https://webstore.iea.org/download/direct/105831
https://wriorg.s3.amazonaws.com/s3fs-public/The_Trillion_Dollar_Question_II_Tracking_Investment_Needs_in_Transport_0.pdf
32
CBI State of the Market 2019: https://www.climatebonds.net/files/reports/cbi_sotm_2019_vol1_04d.pdf
33
Lefevre et al. 2014. World Resources Institute. Available at: https://www.wri.org/sites/default/files/
trillion_dollar_question_working_paper.pdf
34
SLoCaT, 2018: http://slocat.net/tcc-gsr
35
Saha, D. et al. 2018. World Bank Group: http://documents1.worldbank.org/curated/en/658451524561003915/pdf/125640-AR-PPI-2017AnnualReport-PUBLIC.pdf
26

9

Climate Bonds Initiative Land Transport Background Document

Table 3: overview of example bond-types, issuers and revenue streams of low carbon transport bonds that
could be eligible for certification
Bond-types

Issuers

Revenue Streams

Purposes

Sovereign

Treasury revenues

Public Agencies
Municipal authorities

Treasury revenues

Support national
infrastructure projects
to reduce emissions
from transport
Roll-out of publicmass transit systems
as part of sustainable
cities policies

Financial Institution Development Banksand Commercial
Bonds

Treasury revenues

Public Sector
Bonds

Banks

Portfolio Bonds

Automobile
manufacturer,

Sovereign green
bonds, sukuk
bonds
US muni bonds

Rail system
upgrades, new rail
Consumer auto loans infrastructure
Manufacturing EVs,
Hybrids

World Bank green
bonds

Auto loan cash flows

New loans for low
carbon vehicles (e.gEVs and Hybrids)

E.g. Toyota

Treasury revenues

E.g. Tesla
EV, Hybrid
automobile
manufacturing facility
EV battery production E.g. Johnson
Controls

Asset-Backed
Securities (ABS)

Corporate Bonds

Potential
ExamplesEV supply chain
technology providers

Treasury revenues
Lease Financecontracts
Notes: Some bonds may be a combination of two approaches e.g. asset-backed securities backed bygovernment agencies or local authorities; or covered bonds with FI and portfolio bond characteristics. ‘Treasury’
denotes balance sheet finance of issuer

2.5

Bonds in the sector

Research conducted by Climate Bonds Initiative has identified up to USD 509 billion36 in outstanding
bonds clearly aligned with the transport sector, representing 59% of the total universe of climatethemed bonds.37 Table 4 provides recent examples of bonds in the transport sector.
Table 4. Examples of recent bonds in the transport sector.
Issuer
Rumo

Year
July
2020

New York
Metropolitan
Transport
Authority

May
2020

Description
USD 500mn, 8-year bond to finance the purchase of new
locomotives and rolling stock for rail freight. Bond
proceeds will also be allocated to upgrading the related
infrastructure to support these trains and the associatedrailway lines38
USD 1.725bn (29-year bond) allocated for capital
investments in MTA’s electrified rail assets andsupporting infrastructure39

Credentials
Climate Bonds
Certification

Climate Bonds
Certification

36

CBI State of the Market 2019: https://www.climatebonds.net/files/reports/cbi_sotm_2019_vol1_04d.pdf
See http://www.climatebonds.net/files/post/files/cb-hsbc-15july2014-a3-final.pdf
38
https://www.climatebonds.net/Certification/Rumo39
https://www.climatebonds.net/certification/new-york-mta
37

10

Climate Bonds Initiative Land Transport Background Document

IssuerSociété duGrand Paris

Year
May
2020

Ermewa
Group

Dec
2019

Akiem Group

Sept
2019

Porsche AG

Aug
2019

Auckland City
Council
RussianRailways

July
2019
May
2019

ALD
Automotive

Oct
2018

City of Cape
Town

2017

Description
EUR 1.5bn (USD 1.626bn), 30-year bond to finance theconstruction of new lines and line extensions: almost 200
km of new metro lines to supplement the 400 km ofexisting lines in the Ile-de-France region40
EUR 528mn (USD 581mn) bond (tenor up to 10 years) tofinance Ermewa’s portfolio of over 20,000 railcars which
do not carry any fossil fuels or petrochemical products.
The eligible rolling stock carry cereals, industrial goods
and other products41
EUR 360mn (USD 398mn) bond (tenor up to 15 years) to
refinance the issuer’s fleet of 298 fully electrified train
locomotives42
EUR 1bn (USD 1.12bn) bond (tenor up to 7 years) tofinance development and production of its Taycan model,
which is Porsche AG's first fully electric car43
NZD 150mn (USD 99.2mn), 6- year bond to finance theacquisition of new trains and electrified rail equipment44
EUR 500mn (USD 585mn), 8-year bond to finance rollingstock which operate on many commuter and intercity
routes. It is currently the most common high speed trainmodel operating in Russia45
USD 580mn, 4-year bond used to finance and refinancethe acquisition and operations of vehicles which comply
with the Low Carbon Transport criteria, particularlyelectric vehicles46
ZAR 1bn (USD 76mn), 10-year bond to invest in projects
that are consistent with the City’s sustainability goals andwhich help the city to adapt to and mitigate climatechange, including replacement of the city’s BRT buseswith electric buses47

Credentials
Climate Bonds
Certification

Climate Bonds
Certification

Climate Bonds
Certification
Climate Bonds
Certification
Climate Bonds
Certification
Climate Bonds
Certification

Climate Bonds
Certification

Climate Bonds
Certification

40

https://www.climatebonds.net/certification/societe-du-grand-paris
https://www.climatebonds.net/Certification/Ermewa
42
https://www.climatebonds.net/certification/akiem
43
https://www.climatebonds.net/certification/porsche
44
https://www.climatebonds.net/certification/auckland-council
45
https://www.climatebonds.net/certification/Russia_Railways
46
https://www.climatebonds.net/certification/ald-automotive
47
https://www.climatebonds.net/certification/city-of-cape-town
41

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Climate Bonds Initiative Land Transport Background Document

3 Principles and Boundaries of the Sector Criteria
3.1

Guiding principles

The Climate Bond Standard needs to ensure that the transport assets and projects included in
Certified Climate Bonds are low carbon and climate resilient, in line with best available scientificknowledge and compatible with the goals of the Paris Agreement. At the same time, the Transport
Criteria need to be pragmatic and readily usable by stakeholders in the market, to maximise
engagement and use. High transaction costs run the risk of reducing uptake of the Standard.
Keeping the costs of assessment down while maintaining robust implementation of the criteria is
important. Table 5 sets out the principles guiding the development of the Transport Criteria to meetand balance these two goals.
Table 5: Key principles for the design of the Transport Criteria.
Principle

Requirement for the Criteria

Level of ambition

Compatible with meeting the objective of keeping global temperature rise well
below 2ºC above pre-industrial levels set by the Paris Agreement, and with arapid transition to a low carbon and climate resilient economy.

Robust system

Scientifically robust to maintain the credibility of the Climate Bond Standard.

“Do not reinvent thewheel”

Harness existing robust, credible tools, methodologies, standards and data toassess the low carbon and climate resilient credentials of any technology,
endorsed by multiple stakeholders where possible.

Level playing field

No discrimination against certain groups of operators or geographies.

Multi-stakeholder support

Supported and developed by key stakeholders; those within the relevant
industry, the financial community and broader civil society.

Continuous improvement

Subject to an evolving development process with the aim of driving continuous
improvement and credibility in the green bond market.

Practically applicable

The criteria should be practically applicable taking into account the differing
structures of the current low carbon transport industry and the debt capital
market.

Lifecycle Emissions

Where possible, entire asset lifespans are at least considered, and ideally taken
into account to ensure that they contribute to emissions reductions.

Development of the Transport Criteria is intended to broaden knowledge and capacity among potential
bond issuers about the credentials transport assets and activities must have if they are to beconsidered low carbon and climate resilient.
In addition to the overarching principles discussed in the table above, the following additional
considerations were central to developing the Criteria and facilitating the scoping process.

3.1.1

Eligibility based on quantitative emissions reductions

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Climate Bonds Initiative Land Transport Background Document

Defining bond eligibility under the Transport Criteria seeks to be, where possible, based on quantitativeemissions reductions to provide better certainty that certified bonds will lead to their expected climate
impact. With notable exceptions, this means compliance will be based on clear, quantitative
benchmarks or thresholds that result in a decision of “eligible” or “not eligible”. No intermediate statusis possible.
Nonetheless, this approach needs to:•••

Be flexible for bond issuers regardless of whether they are financing new or refinancing existing
projects and assets
Be measurable during all phases of implementation
Keep transaction costs of proving compliance low, within reason

3.1.2

Technology agnostic

In general, the Climate Bonds Standard avoids picking 'winners and losers’ in terms of technologies –a task beyond its mandate and capacity. For example, despite the incompatibility of fossil fuels with alow carbon economy, this is reflected in the quantitative thresholds rather than outright exclusions. It
is assumed that the threshold is stringent enough to exclude most fossil fuel transport assets andactivities. However, electronic vehicles (EVs) are singled out as eligible assets as they are a clear partof the low carbon transport sector. The purpose of this is to give a clear signal to the market and easefor issuers financing such projects, rather than giving preferential treatment over other solutions.

3.1.3

Carbon offsets

The Transport Criteria do not accept carbon offsets as eligible mitigation assets or activities. Asidefrom certain controversies associated with carbon offsetting, carbon offsetting also takes the
responsibility away from the issuer to improve their practices in terms of emissions mitigation. As it is
the transport sector itself that must decarbonise, excluding offsets keeps the onus on the sector totake considerable steps towards reducing its emissions. This is consistent with other Climate Bonds
Standard sector criteria.
Further details of eligible and ineligible assets under the Transport Criteria can be found in Table 6.

3.2

Assets in Scope

Table 6 presents use of proceeds that might be included in a Certified Climate Bond, subject to meeting
the Criteria described in section 4.4. The first column in Table 6, ‘Eligible activity types’, gives an
exhaustive list of all the activity types that are within scope of the Transport Criteria. The second
column, ‘Example use of proceeds’, is an illustrative list of the type of projects that may be included ina Certified Climate Bond. It is not possible to include an exhaustive list of all potential use of proceeds
due to the breadth of possibilities, but all use of proceeds must fall within one of the specified eligible
activity types.
The assets in Table 6 are eligible for inclusion in a Certified Climate Bond if they meet the relevant
mitigation requirements (see section 4.4 for details).
Bonds financing multiple projects may also have to prove compliance with other Sector Criteria to beeligible for Climate Bonds Certification. For example, if a bond includes both transport projects andsolar projects it would be necessary for the issuer to prove compliance with both the Transport Criteria
and the Solar Criteria.
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Climate Bonds Initiative Land Transport Background Document

The scope of eligible assets and activities is presented in Table 6 and has been organized using a
traffic light system for ease of use as follows:▪
Green circle: almost certain to be compatible with a low carbon or climate-resilient economy
in all circumstances and automatically assumed to be eligible for certification▪
Red triangle: almost certain to be incompatible with a low carbon or climate-resilient economy
and automatically assumed to be ineligible▪

Amber square: ambiguous and needing further assessment to determine its eligibility

The first column in Table 6, ‘Eligible activity types’, gives an exhaustive list of all the activity types thatare within scope of the Transport Criteria. The second column, ‘Example use of proceeds’, is an
illustrative list of the type of projects that may be included in a Certified Climate Bond. It is not possible
to include an exhaustive list of all potential use of proceeds due to the breadth of possibilities, but alluse of proceeds must fall within one of the specified eligible activity types.
Table 6: scope of eligible projects and assets for Climate Bonds Certification under the Transport Criteria.
Asset category

Example use of proceeds

Passenger cars and Manufacture and upgrade, purchase, and/or operation ofcommercial vehicles – zero direct emissions passenger or light commercial
private and lightvehicles, for example:
commercial vehicles
o Electric vehicle manufacturing
which transport privateo Banks leasing electric vehicles
passengers along witho Taxi firms operating electric vehicle fleets
key components for
Manufacture and upgrade and/or purchase, of key
such vehicles
components to be used in eligible vehicles, for example:o Manufacturing of high-density lithium-ion batteries(See section 4.5.1 foro Leasing of high-density lithium-ion batteries
an overview of the
Manufacture and upgrade, purchase, and/or operation of
criteria for this asset other passenger and light commercial vehicles, forcategory)
example:o Hybrid vehicle manufacturingo Banks leasing hybrid vehicles
o Taxi firms operating hybrid vehicle fleets
Manufacture and upgrade, purchase, and/or operation offossil fuel or biofuel passenger and light commercial
vehicles (for example Internal Combustion Engine)
Public passenger
Manufacture and upgrade, purchase and/or operation oftransport by road –zero direct emissions buses or coaches, for example:
buses (urban) ando Electric bus manufacturingcoaches (interurban)
o Entities leasing electric buses
transporting public
o Private coach companies operating electric coachpassengers along withfleetskey components for
Manufacture and upgrade and/or purchase, of key
such vehicles
components to be used in eligible vehicles, for example:o Manufacturing of high-density lithium-ion batteries(See section 4.5.2 foro Leasing of high-density lithium-ion batteries
an overview of the
Manufacture and upgrade, purchase, and/or operation of
criteria for this asset other buses and coaches, for example:
category)o Public bus manufacturingo Banks leasing hybrid vehicles
o Private coach companies operating hybrid
vehicle fleets

Mitigation

See Criteria
section(s)o 4.4.1

o

4.4.1

o
o

4.4.2
4.4.4

No criteria as
ineligible
o

4.4.1

o

4.4.1

o
o

4.4.2
4.4.4

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Climate Bonds Initiative Land Transport Background Document

Asset category

Freight transport byroad – heavy-duty
vehicles used for the
purpose of moving
goods along with key
components of suchvehicles(See section 4.5.3 foran overview of thecriteria for this asset
category)

Passenger railtransport rolling stock– rolling stock for the
purpose oftransporting publicpassengers(See section 4.5.4 foran overview of thecriteria for this asset
category)

Freight rail transportrolling stock – rollingstock for the purposeof transporting goods(See section 4.5.5 foran overview of thecriteria for this asset
category)

Rail transport
networks – rail
networks and lines
and supporting
infrastructure for the
purpose oftransporting

Example use of proceeds
Manufacture and upgrade, purchase, and/or operation of
biofuel buses and coaches
Manufacture and upgrade, purchase, and/or operation ofzero direct emissions heavy duty vehicles, for example:o Electric truck manufacturingo Banks leasing electric truckso Logistics companies operating electric truck fleets
Manufacture and upgrade, purchase, and/or operation of
all other heavy duty vehicles, for example:o Hybrid or biofuel truck manufacturingo Banks leasing non-electrified truckso Logistics companies operating hybrid or biofuel
truck fleets
Manufacture and upgrade and/or purchase, of key
components to be used in eligible vehicles, for example:o Manufacturing of high-density lithium-ion batterieso Leasing of high-density lithium-ion batteries
Manufacture and upgrade, purchase, and/or operation ofzero direct emissions urban rail transit rolling stock, forexample:o Manufacturing of electrified metro rolling stocko Leasing of tramway carriages
o Entities operating electrified metro rolling stock
Manufacture and upgrade, purchase, and/or operation ofzero direct emissions rolling stock, for example:o Manufacturing of electrified passenger rail rollingstocko Leasing of passenger rail carriages
o Train companies operating electrified passenger
rail rolling stock
Manufacture and upgrade, purchase, and/or operation ofother rolling stock, for example:o Manufacturing of diesel passenger rail rolling stocko Leasing of passenger rail diesel carriages
o Train companies operating diesel passenger rail
rolling stock
Manufacture and upgrade, purchase, and/or operation ofzero direct emissions rolling stock, for example:o Manufacturing of electrified freight rail rolling stocko Leasing of freight rail carriages
o Train companies operating electrified freight rail
rolling stock
Manufacture and upgrade, purchase, and/or operation ofother freight rail rolling stock, for example:o Manufacturing of diesel passenger rail rolling stocko Leasing of diesel passenger rail carriages
o Train companies operating passenger rail rollingstockConstruction and development, purchase, and/or operationof zero direct emissions urban rail transit lines, forexample:o Construction of metro or tramway lines
o Leasing of metro or subway lineso Network operators operating an urban rail transit
network

Mitigation

See Criteria
section(s)No criteria as
ineligible
o 4.4.1
o 4.4.3

No criteria as
ineligible

o

4.4.1

o

4.4.1

o
o

4.4.1
4.4.5 (if new
interurban rail)

o
o
o

4.4.2
4.4.4
4.4.5 (if new
interurban rail)

o
o

4.4.1
4.4.3

o
o
o
o

4.4.2
4.4.3
4.4.4
4.4.5 (if new
interurban rail)

o

4.4.1

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Climate Bonds Initiative Land Transport Background Document

Asset category

Example use of proceeds

passengers, goods, or Construction and development, purchase, and/or operation
a mixture of bothof exclusively zero direct emissions railway lines, forexample:(See section 4.5.5 foro Construction of electrified interurban railway lines
an overview of theo Leasing of railway contracts
criteria for this asset
o Network operators operating a regional electrified
category)
railway network
Construction and development, purchase, and/or operationof railway lines not used exclusively by zero directemissions rolling stock, for example:o Construction of interurban railway lines
o Leasing of railway contracts
o Network operators operating a regional railway
network
Miscellaneous
Manufacture, operation and leasing of zero direct
vehicles for otheremissions waste collection vehicles
sectors – mobile
vehicles that serve
Manufacture of zero direct emissions miscellaneous
purposes other than vehicles used in other sectors, for example:
transportingo Mobile stairways or buggies
passengers or freighto Off-road excavators or concrete trucks used inalong with key
construction
components for such Manufacture of key components to be used in eligible
vehiclesvehicles, for example:o Manufacturing of high-density lithium-ion batteries(See section 4.5.6 foro Leasing of high-density lithium-ion batteries
an overview of thecriteria for this asset
category)
Infrastructure for low Construction of dedicated infrastructure for other types ofcarbon transport –emissions-free travel such as public walking and cycle
other supporting
lanes
infrastructure andDedicated charging and alternative fuel infrastructure
logistics that link
(when separable from fossil fuel filling stations anddirectly to one or more garages)
mode of transport, or Construction and development, purchase, and/or operation
physical asset orof dedicated infrastructure for eligible rolling stock, railway
activity. These activity lines and networks, for example:
types might concerno Train and bus stations
system operations, oro Inspection depots for freight rail rolling stock
facilities that improveo Traction maintenance depots / Motive power
the performance of
depots for rolling stock
such supportingo Backup electricity generators
systems. Constructiono Signalling infrastructure including buildings
and running offacilities may still be The implementation and integration of Information andCommunication Technology (ICT) systems that improve
included in theseasset utilisation, flow and modal shift, regardless ofactivities.
transport mode (for example public transport information,(See section 4.5.7 for car-sharing schemes, smart cards, road charging systems,
etc.)
an overview of thecriteria for this asset
category)

Construction of facilities for intermodal freight anddevelopment of smart freight logistics

Mitigation

See Criteria
section(s)o 4.4.1
o 4.4.3 (if freighttransported on
the line)o 4.4.5 (if new
interurban rail)
o
o
o

o

4.4.2
4.4.3
4.4.4 (if freighttransported on
the line)
4.4.5 (if new
interurban rail)
4.4.1

o

4.4.1

o

4.4.1

o

4.4.1

o

4.4.1

o

Automaticallyeligible if 100%
dedicated toeigible lines andvehicles (seesection 4.4.7)

Eligible on a caseby-case basis (seesection 4.4.7)

Eligible on a caseby-case basis (seesection 4.4.7)

16

Climate Bonds Initiative Land Transport Background Document

Asset category

Research andDevelopment

3.3

Example use of proceeds

MitigationDevelopment and integration of transport and urban
development planning systems – for example,
improvements to terminals to improve journey times

See Criteria
section(s)Eligible on a caseby-case basis (seesection 4.4.7)

Construction of new roads, road bridges, road upgrades,
parking facilities, fossil fuel filling stations, etc.

No criteria as
ineligible

Relevant research and development, training and program
implementation costs and expenditures, where there is adefinable future asset, product and/or process that can belinked to climate benefits under the Transport Criteria.

See Climate
Bonds Standard
V3

Assets out of Scope

The red items in Table 6 are excluded either because they are incompatible with a low carbon or
climate-resilient economy or because determining their eligibility is outside the mandate of theTransport Criteria. The justifications for exclusions are presented in the following sections. Other
exclusions not in table 6 are also included below.

3.3.1

Fossil fuel vehicles and supporting infrastructureInternal Combustion Engine (ICE) and Compressed Natural Gas (CNG) vehicles are automatically
excluded from these criteria for simplicity. Discussions centred around whether this was necessary
considering the threshold requirements present for passenger cars and commercial vehicles (seesection 4.4.1). While it is expected that the threshold will exclude most if not all such vehicles fromcertification (and certainly all by 2025), it was decided that automatic exclusion would a) make thecriteria easier to use for issuers and; b) send a clear market signal that ICE and CNG vehicles are notpart of a low carbon future for transport, with far more suitable alternatives already present for green
bond investments (electric vehicles being the prime example).
Supporting infrastructure such as new roads and fossil fuel filling stations are also out of scope inthese criteria and therefore ineligible.

3.3.2

Dedicated fossil fuel rail transport

Even in a case where the transport asset or activity has emissions lower than the thresholds specified
in section 4.3.2, if the asset or activity is at least partially dedicated to transport fossil fuels (for example
coal or oil), then it is automatically ineligible for certification under these criteria. This is because it
locks-in further use of fossil fuels in the global economy and ultimately supports an economic activity
which has been comprehensively shown to be incompatible with the Paris agreement. For thesecriteria ‘partially dedicated’ can be understood as more than 25% of the assets being used to transport
fossil fuels.

3.3.3

Other emissions out of scope

The Transport Criteria have been developed with an intentional focus on the operational emissions of
the transport industry – direct emissions from vehicles in operation. That is not because nonoperational emissions (for example upstream emissions from energy production, or embodied
emissions associated with manufacture and disposal) are not considered important. However, for17

Climate Bonds Initiative Land Transport Background Document

practical reasons it is not deemed feasible for an issuer to manage the upstream or embedded
emissions of an asset at point of bond issuance.
As a result, the Transport Criteria are based on inclusion in scope of assets that are either vehicles,or the infrastructure that directly supplies vehicles with energy/fuel. For reasons of pragmatism, thecriteria do not cover:•

Upstream infrastructure associated with the energy used by vehicles in operation, forexample those associated with the production or transport of energy/fuel outside filling
stations.

•

Infrastructure associated with the construction and disposal of vehicles.

These criteria can thus not be used to certify assets associated with the upstream production of fossilbased energy/fuel or the disposal of vehicles.
We also recognise that refrigeration gases on freight trucks pose a significant challenge to both ourozone layer and global warming, and there are opportunities for the transport sector to reduce these
impacts. However, these assets and emissions were not included within scope of the Transport Criteria
because their use crosses between different industries across the transportation and logistics sector.

3.4

Alignment with other Sector Criteria

It is essential that clear guidance on which Sector Criteria assets and projects are eligible for Climate
Bonds Certification is given. This saves confusion and means that it is clear to the verifier, issuer andinvestor, which requirements a given asset or project is expected to meet. Table 7 identifies possible
overlaps and explains which Sector Criteria should be referred to in which cases. The following
sections give further explanation.

Table 7: clarification of under which Sector Criteria assets or activities are eligible for Climate Bonds
Certification.
Assets or Activity

Applicable Sector Criteria

Bus Rapid Transit

Bus Rapid Transit are specific systems seen in many countries
whereby buses have dedicated roadways and priority over other roadtraffic. Issuers seeking to certify such systems in developing countries(as defined by the OECD) should use the BRT Criteria.
Bus Rapid Transit systems in developed countries (OECD defined)should use the Transport Criteria.

Vehicles for use in forestry
projects

Vehicles used within a forest concession up to the forest gate are applicablefor Certification under the Forestry Criteria, rather than the Transport Criteria.
Vehicles used beyond a forest concession and past the forest gate mustcomply with the Transport Criteria.

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Climate Bonds Initiative Land Transport Background Document

Forest Roads

Roads constructed through forest concessions can be Climate Bonds certified
under the Forestry Criteria so long as they meet all the necessary
requirements (see Section 3.7 of the Forestry Criteria).
Note: regular, non-forest roads are not currently eligible for certification under
the Transport Criteria.

Infrastructure - Buildings

Renewable energy
production for powering
electrified transport

Shipping

3.4.1

Buildings constructed that are not used solely for the purposes of supportingtransport assets and activities (for example an office building partiallyoperating an ICT support system for a public transport network), must also
meet the requirements of the Low Carbon Buildings Criteria.
Any buildings to be constructed for the purposes of acting as dedicatedsupporting infrastructure for transport activities and projects (for example afreight train depot), need only meet the Transport Criteria. This means that theassets or activities it supports must meet the criteria.
Any use of proceeds marked for financing projects and assets pertaining to
renewable energy production to generate electricity for transport assets listed
in these Criteria will be dealt with its appropriate Criteria (for example,
electricity generated through solar power must meet the Solar Energy
Criteria).
Assets relating to water transport, be it passenger or freight, such as vessels
or port infrastructure, will be applicable for certification under the Shipping
Criteria.

Forestry (vehicles and roads)

Vehicles which are used in forestry projects and within a forest concession up to the forest gate areapplicable under the Forestry Criteria, rather than the Transport Criteria. This is justified as follows in
the Forestry Criteria Background document48 :‘Supporting vehicles working on the forestry concession are an essential part of the management of
all forestry operations. In addition, the carbon sequestration benefits of the forests should outweighthe emissions from vehicles. Requiring that these supporting vehicles comply with the Transport
Criteria, would likely cause an issuer to decide not to get Climate Bonds Certification rather thanremove vehicles from their use of proceeds. Instead, as these vehicles are necessary supporting
infrastructure, particularly to good management of forests, they are included as eligible supporting
infrastructure if they are used predominantly within the forest concession. Vehicles, such as trucks,
that are used predominantly beyond the forest gate would still have to meet the Transport Criteria.’
The Climate Bonds Standard normally excludes roads from eligible use-of-proceeds as alreadyspecified in these criteria (see Table 6). Forest roads, on the other hand, are an essential infrastructure
for a forest operation. The Forestry TWG stressed the importance of their inclusion as without forest
roads, machinery may cause more damage to a forest in reaching a plantation (damaging thesequestration capacity of the forest) and moreover take longer, thereby increasing its emissions overall.

3.4.2

Infrastructure – Buildings

If a building is being constructed or retrofitted in order for dedicated use to transport assets or activities
which in turn meet the Transport Criteria, the building meets the criteria by extension. This is because
the building is an essential piece of infrastructure for that asset or activity and requiring an issuer toalso meet the Buildings Criteria is outside the mandate of the Transport TWG.
48

https://www.climatebonds.net/files/files/CBI_Background%20Doc_Forests_November%202018%282%29.pdf

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Climate Bonds Initiative Land Transport Background Document

However, any building that is not dedicated to eligible transport assets or activities should meet the
Buildings Criteria49.

3.4.3

Renewable energy production for powering electrified transport

As discussed in section 3.3.4 (Other emissions out of scope), the Transport Criteria do not cover the
production of energy used to power vehicles, even if eligible. In the case of electrified transport, which
is automatically eligible, any renewable power used to produce the electricity must meet the respective
criteria depending on the type of renewable energy. For example, offshore wind falls under the Marine
Renewables Criteria50 while solar power falls under the Solar Criteria51.

3.4.4

Shipping

Issuers seeking to certify assets or activities relating to passenger or freight water transport (i.e.
shipping) must meet the Shipping Criteria52 rather than the Transport Criteria as this falls outside of
the scope of these criteria.

49

https://www.climatebonds.net/standard/buildings
https://www.climatebonds.net/standard/marine
51
https://www.climatebonds.net/standard/solar
52
https://www.climatebonds.net/shipping50

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4 Discussion and Eligibility Criteria
4.1

Overarching issues and considerations

The purpose of the Transport Criteria, like all Sector Criteria developed for the Climate Bonds Standard& Certification Scheme, is to certify assets and projects that are aligned with a low carbon economy
and are climate resilient. Requirements for demonstration of alignment with these objectives will varydepending on the type of transport assets and activities that are being financed. However, there arealso overarching principles and considerations that might apply to all areas of transport within scope.
These are discussed in detail in this section.

4.1.1

The overarching principles of the Transport Criteria

The Transport Criteria require compliance with the following:•

The investment results in transport solutions that directly contribute to reducing atmosphericgreenhouse gas concentrations (GHGs) consistent with avoiding dangerous climate change, andhave at least a neutral impact on mitigation (i.e., no net GHG increase)•

Lock-in of carbon-intensive investments must be avoided. The right types of investments are
required now to facilitate deeper cuts in the future. This means rewarding not only incremental
reductions in carbon emissions but taking a long-term strategic view.

The requirements for each type of transport assets (e.g. interurban passenger rail or road freight) aredesigned to reflect these overarching principles.

4.1.2

Ambitious mitigation of GHG emissions and decoupling transport emissions
from economic growth

There are particularly strong links between economic growth and demand for transport. As people get
wealthier, they demand greater quantities of goods, which need to be transported, and are more likely
to travel further for both work and leisure. According to the IPCC, transport emissions are expected toincrease faster than emissions from any other energy-using sector without “aggressive and sustained”
mitigation measures53. As it noted in the Transport Chapter of its Fifth Assessment Report:“Reducing global transport greenhouse gas (GHG) emissions will be challenging since the continuing
growth in passenger and freight activity could outweigh all mitigation measures unless transport
emissions can be strongly decoupled from GDP growth.”
While there is some evidence that this decoupling might have started in some developed countries, it
is not expected in the developing world “for the foreseeable future”. Whether the transport sector yields
emissions savings depends on whether gains in carbon efficiency are offset by gains in distancetravelled. In order to counter this, investment in mitigation options will be required well beyond low
carbonvehicles,including:

53

Sims et al. (2014) ibid.

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Climate Bonds Initiative Land Transport Background Document•

Modal shift: new and retrofit public transport infrastructure, from intercity rail to local buses;
infrastructure to encourage walking and cycling; intermodal freight facilities; investment interminals to improve journey times and appeal of public transport.

•

Journey avoidance: smart freight logistics; car-sharing; improved ICT to avoid commuting.

•

Fuelling infrastructure and supply for new vehicle technologies: electric vehicle charging
infrastructure, hydrogen fuel stations, hydrogen storage.

This is in addition to investments that could, in theory, support assets or activities that have:•

Positive transformational effects on a supply chain: for example, other companies adopt thepractices of companies financed by certified bonds and thereby gain experience with
mitigation strategies, leading to new expectations for transport or logistics practices.

•

Positive transformational effects on a region: for example, successful GHG reduction
strategies are mimicked across the larger region, leading to ‘scaled up’ mitigation.

•

Positive transformational effects on sectoral business practices: for example, bond-financed
initiatives can test novel transport activities at scale and pave the way for broader application.

4.1.3

Dynamic systems increase the difficulty of estimating absolute emissions
savings

Transport systems are dynamic systems subject to well-known feedback effects such as induced
demand, fuel efficiency rebound effects and interactions with land use planning. These increase thedifficulty of forecasting demand and measuring net emission reductions. The most thorough andaccurate low carbon criterion for transport infrastructure projects and products would estimate lifetime
emissions savings in absolute tonnage terms, taking such second-order effects and modal shift into
account.54
In the absence of pre-existing project appraisals, such calculations are unfeasibly complex andonerous for the purposes of the Standard, and much of the data is in any case unavailable. By default,
we therefore favour a methodology based on per passenger-kilometre (p-km) and per tonne kilometre(t-km) thresholds to keep eligibility assessments simple and tractable.
However, we propose that for interurban rail projects (e.g. high-speed rail and dedicated freight rail)
an independent project appraisal should be carried out showing that these investments will reduce
total transport related carbon emissions in the affected corridor by at least 25% (see sections 3.3, and3.4 of the Transport Criteria document for where this requirement is pertinent). This Criterion has been
particularly prompted by concerns around interurban and highspeed rail projects, namely thatemissions savings due to modal shift away from road and aviation can be at least partially offset by
induced demand and increased terminus traffic. 55
The chosen reduction requirement was originally between 10% and 25%, decided on by the TWG in
V1 of the Transport Criteria. V2 of the Criteria now requires more simply a minimum 25% emissions
reduction to avoid ambiguity, and because an upper limit on emissions reduction is unnecessary. Thisrequirement is only for new projects and not for existing interurban passenger rail projects beingrefinanced.
Eckelman, M.J. “Life cycle assessment in support of sustainable transportation”. Environmental Research Letters, 8(2), p.021004(2013).
55
Lee, Douglass B., Lisa A. Klein, and Gregorio Camus. "Induced traffic and induced demand." Transportation Research Record: Journalof the Transportation Research Board 1659.1 (1999): 68-75; Hymel, Kent M., Kenneth A. Small, and Kurt Van Dender. "Induced demand
and rebound effects in road transport." Transportation Research Part B: Methodological 44.10 (2010): 1220-1241.
54

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4.1.4

Decarbonisation of the transport sector requires more than incremental
changeA fundamental principle of the Climate Bonds Standard is to avoid lock-in of carbon-intensive
investments. The right types of investments are required now to facilitate deeper cuts in the future.
This means rewarding not only incremental reductions in carbon emissions, but taking a long-term
strategic view.
It is vitally important to tackle vehicle emissions, which make up the bulk of transport emissions. Unlike
power generation or industry, these emissions originate from millions of individual point sources(private vehicles) controlled by individual decision-makers. Emissions cannot feasibly be monitored or
capped, and forcing technological options is often politically unacceptable. This limits policy drivers
mostly to price pressure, and emissions standards for manufacturers. Within this framework, thefreedom of individuals to choose lower or higher carbon transport is a political reality but also a barrier
to decarbonisation. In addition, the impact of new carbon efficient vehicles has an in-built time lag,given that only a proportion of vehicles will be replaced in any given year. In the EU, fleet turnover was
about 6% per year56 in 2014, meaning that it would take at least 17 years to replace the whole fleet.
The penetration of low carbon vehicles faces further economic and technical barriers in the form of
network externalities related to fuelling infrastructure, limited range and cost of components such asbatteries. Overcoming these barriers requires innovations and economies of scale that can only be
driven by more certain and widespread uptake. Ambitious performance standards communicating theneed for transformational, rather than incremental, changes are necessary to achieve this.

4.1.5

Potential for radical decarbonisation is dependent on broader climate policyLong-term opportunities for radical decarbonisation of land transport are presented by greater use ofelectrification and hydrogen. In 2014 electricity represented only 1% of the total energy demand oftransport worldwide57, but electrification of transport is widely recognized as an area of high potential
in both freight and passenger sectors58. Hydrogen currently makes up about 4% of global final energy
and non-energy use, but around 95% of this is generated from natural gas and coal59.
In both cases their short-term mitigation potential is highly dependent on the supply choices,
technologies and policies in the country of use. Well-to-wheel emissions using hydrogen generated byrenewables-powered electrolysis are considerably lower than for internal combustion engine (ICE)vehicles, while those using hydrogen from steam methane reforming are comparable 60. Similarly, wellto-wheel emissions for electric vehicles in countries with high grid emissions can be higher than for
ICE vehicles. Incorporating this issue into criteria for private vehicles would be complicated by having
to account for grid emissions in not one country, but the many ultimate destinations of vehicle
manufacturers’ exports.
Clearly in both cases, policy decisions need to be made to opt for the lower carbon production path,and we anticipate this being the case over the medium-to-long term for both technologies. Particularly
with respect to hydrogen, given that climate policy will be the primary driver in making it economically
viable, it is justified to assume there will be a policy imperative for the lower carbon production method
to become predominant. Our position is, given their high potential as sustainable transport fuels in a
56

Calculated from Eurostat data and the International Council on Clean Transportation European Vehicle Market Statistics Pocketbook.
Sims et al. (2014) ibid.
58
See discussion in IEA Energy Technology Perspectives 2014.
59https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Sep/IRENA_Hydrogen_2019.pdf
60
See University of California (2014), “Well-to-Wheels Greenhouse Gas Emissions of Advanced and Conventional Vehicle Drive Trains
and Fuel Production Strategies”.
57

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context of broader long-term mitigation policy, there is a clear case for supporting electrified andhydrogen-powered transport. It is important not to disincentivise investment in long-lived assets related
to promising technologies due to what could be transient limitations. For both these reasons, and inorder to maintain simplicity, projects and products related to electrified and hydrogen-poweredtransport will be automatically considered eligible for certification. This is based on an underlying
assumption that, while acknowledging the possibility, circumstances in which certified investments inthese technologies do not result in net carbon savings will be insignificant (both in terms of extent andtime horizon). This assumption will be kept under review as the Standard matures. Upon updating theCriteria to V2, this rationale continues to be pertinent with an even greater evidence base supporting
large-scale implementation of electrification and hydrogen.

4.1.6

Low carbon infrastructure which maintains high fossil fuel consumption
patterns

As Table 1 in section 2.2 shows, high capacity rail can be one of the lowest carbon modes of land
travel, and it is therefore likely that most rail projects will be certified by the Standard.
However, a dilemma is raised by cases of dedicated freight corridors built primarily to transport fossil
fuels, as is currently the case in India61, Indonesia and parts of the USA. In such cases it is difficult tojustify certifying transport projects that will make heavy fossil fuel use both more economical and likely
to be locked-in for the long term.
Alternatively, it could be argued that transporting coal by rail is preferable to transporting it by truck;for example, South Africa’s largest coal consumer, the utility company Eskom, is currently investing inrail lines to replace 5,100 daily truckloads transporting coal to power stations62.
To maintain the credibility of Climate Bonds, it has been strongly recommended by the TWG that in
the initial stages of certification, and to reduce the risk of misinterpretation, any investments forinfrastructure maintaining fossil fuel use patterns be excluded. This exclusion clause is based on the
aforementioned principles of avoiding lock-in and promoting technologies that will contribute to longterm objectives. However, this raises the question of how to determine whether a dedicated freight
corridor is likely to be dominated by fossil fuel-intensive industries without adding excessive complexity
to the certification process (see section 3.3.3).
Similar arguments could be made regarding attempts to build ‘green garages’63 – that if the garage isgoing to exist, it is preferable for it to have charging infrastructure, energy efficient lighting, etc. thannot. We regard establishing the relevant facts in such cases as too onerous and would automatically
exclude all infrastructure that encourages high car use from certification.

4.1.7

Metrics and load factors

The underlying mitigation principle of the Transport Criteria is emissions reduction. In the absence oflife cycle estimations which encompass the full set of emissions associated with a single transport
corridor or vehicle, emissions intensities are the appropriate metric to understand emissions per
kilometre travelled (in grams of CO2). This gives a metric of gCO2 / km, which is then expressed further
either per passenger (for passenger transport) or per tonne (for freight transport) - gCO2 / pkm or gCO2
/ tkm.

61

See http://www.railway-technology.com/projects/dedicatedrailfreight/
See http://www.esi-africa.com/eskom-to-spend-r9-79-billion-to-move-coal-transport-from-road-to-rail/
63
See http://www.greenparkingcouncil.org/certified-green-garages/certification/
62

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Ridership and payload are critical in determining per p-km public transport and per t-km freight
emissions; all else being equal, busy routes have lower emissions per p-km and per t-km than fairly
empty ones. Criteria for transport therefore needs to incorporate appropriate project-specific loadfactors. This can be based on historic data, or subsequently reviewed on the basis of new data, whichshould be available from the relevant public authority and verifiable in relation to ticket revenues.
Note that, for passenger cars and commercial vehicles, the load factor should always be one
passenger as this is based on the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) andother similar emissions testing procedures. In essence this means a metric of gCO 2 / km is also
accepted.

4.1.8

Rationale for universal threshold metric

There are two main options on which to base p-km or t-km criteria for accreditation:•

Emissions saving metric: assessing whether the new project or product reduces emissions
compared to the counterfactual (ΔgCO2/p or t-km); or•

Performance metric: assessing whether the new project or product results in emissions lower
than a given threshold (gCO2/p or t-km). This could either be:a. Universal for all modes of transport; orb. Mode-specific

For the reasons outlined in Section 4.1.4, incremental emissions reductions in existing technologies
are not adequate by themselves. Ambitious performance standards create greater downward pressure
and likelihood that (i) low carbon technologies will mature; and (ii) overall (and not just relative)
emissions reductions will happen. By adopting a universal threshold approach, it should be possible
to qualify all projects that we judge to be an important part of the sustainable transport mix needed fora low-carbon economy (rail, public mass transit, low carbon vehicles for passenger and freight etc.).
As mentioned above, it is likely that the vast majority of rail projects will be certified. We note thatbonds are a traditional financial mechanism for the rail industry, and therefore issuers are unlikely togo through an arduous accounting process at this early stage of the market just to label "green” or“climate-friendly". It is important not to set the administrative hurdles too high that may disincentivise
project development that supports a long-term shift away from private motorised travel.
Finally, performance against a universal threshold is simpler and easier to track over time; setting a
different metric for each mode based on best in class performance would be difficult to monitor as it
would require resources to keep updating it.

4.1.9

Reliability of private vehicle emissions data

In terms of road vehicle emissions, a threshold approach also aligns with regulatory standards in the
EU and California, in theory allowing us to use test cycle information provided by vehicle
manufacturers in complying with these regulations.
It is recognised that emissions data provided by vehicle manufacturers has proven to be unreliable in
the past, as evident in the emissions scandals of 2015 and onwards. Though there is always scope to
improve international regulatory standards by the US EPA and the EU Commission, there have alreadybeen significant developments in the EU as discussed in section 1.1.11. The WLTP represents a25

Climate Bonds Initiative Land Transport Background Document

sizeable improvement in the measurement of and standards for vehicle emissions which can provide
investors with greater assurance of the accuracy of a vehicle’s emissions, “gCO2 per p-km or t-km”.
It is generally important that investors have confidence in the data being used for certification. For thisreason, this first version of the criteria deals with widespread concern over any potential for inaccuracy
in reporting of private vehicle emissions by adopting a cautious approach of placing vehicles within
broad technology categories which are either known to have direct tailpipe emissions of less than theemissions threshold in all cases (e.g., battery and fuel cell vehicles) and those which are not (e.g.
conventional internal combustion engine, liquefied petroleum gas and natural gas vehicles).

4.1.10

Scope of emissions

Possible emissions that could be considered by the criteria are as follows:•

Scope 1: direct tailpipe CO2 emissions from fossil fuel combustion•

Scope 2: indirect emissions from electricity consumption•

Scope 3: emissions resulting from extraction, manufacture, transportation or disposal of fuels
and transport products

We propose only to consider Scope 1 emissions, direct emissions from the vehicle, when comparing
products’ and projects’ performance against the threshold. The reasons for this are as follows:
1. The dominance of road vehicle emissions. The certification process is subject to bothresource and information constraints, so it is practical to focus our efforts on the areas where
both the problem and potential for mitigation are greatest. 97% of all emissions frompowering land transport result from fossil fuel combustion in road vehicles, with indirectemissions from electricity consumption contributing less than 3%64.
2. The need to send strong signals to vehicle purchasers. Considering well-to-wheel emissions
could mean that a more polluting vehicle manufactured in a country subject to emissions
constraints for manufacturers is treated as equivalent to a lower carbon vehicle manufactured
in a non-regulated country. This weakens signals to consumers who, as noted above, are key
decision-makers in reducing emissions from the transport sector. Furthermore, the evidencecomparing gCO2/km emissions of different vehicle technologies seems to suggest thatcriteria based on well-to-wheel emissions would have the same results as criteria based on
direct emissions, except in very few edge cases65. For these reasons, it is judged thatconsidering embedded emissions will result in onerous information requirements with little
practical benefit.
3. The need to promote technologies and infrastructure that have the potential to radically shift
emissions trajectories and avoid fossil fuel lock-in. As noted above, electrified modes havethe potential to dramatically lower transport emissions if deployed in conjunction with adecarbonising electricity supply. In addition, electric vehicles face cost and infrastructurebarriers that need widespread uptake to be overcome. Most importantly, private electric andhybrid vehicles will be sold internationally for use in countries with vastly different gridemissions; we do not know what their indirect emissions will be.
64

See Figure 8.1 in Sims et al. (2014) ibid.
For example, a battery electric vehicle could have higher well-to-wheel emissions than an efficient diesel vehicle in a country with highgrid emissions, as discussed. However, generally well-to-tank emissions of ICE vehicles are high enough for this not to be concern. See
Kromer and Heywood (2007), “Electric Powertrains: Opportunities and Challenges in the U.S. Light-Duty Vehicle Fleet”, Sloan Automotive
Laboratory, Massachusetts Institute of Technology; and Knobloch et al. (2020): Net emission reductions from electric cars and heat pumps
in 59 world regions over time
65

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An exception in terms of scope is made in cases where a project appraisal predicts a net gain in carbon
emissions from a transport project regardless of scope (see 4.1.3).
As highlighted, the standard has been subject to a process of review that considered whether Scope
2 emissions should be included, assessing whether jurisdictions are progressing sufficiently towards
lower carbon electricity generation for their inclusion or exclusion to be justified. Section 4.1 generally
outlines that many of these issues highlighted above are still pertinent enough that incorporation ofthese scopes of emissions continues to be difficult.

4.1.11

Exclusion of biofuel vehicles in the Transport Criteria

Biofuels and vehicles designated as using biofuels continue to be ineligible under V2 of the Transport
Criteria as they were in V1. Several considerations form the rationale for excluding this type of fuel.
Originally, the TWG acknowledged the complex issues surrounding biofuel production, deciding that
exclusion was the best way of avoiding potential problems further down the line that might arise incertifying bonds that will finance biofuel vehicles in transport. In V2 we further clarify these issues.
Regarding the carbon credentials of biofuel use in transport, complexity does not restrict itself simply
to issues with indirect land use change (ILUC), deforestation and water demand, which are outlined ina 2014 IPCC report66. These issues also all link to potential problems with the supply of biofuels. The
higher the demand for biofuels (which may be artificially increased through policy and/or financial
support), the more these issues described by the IPCC are amplified. Therefore, it was decided that
biofuels will be excluded for the following further reasons:•

The transport sector already has better viable alternatives (even for road freight) with fewer
environmental impacts than biofuels, for example electrification. The gap in carbon
credentials between biofuels and these alternatives will likely only grow over time (forexample, improvements to battery storage).

•

While Climate Bonds is supportive of the evidence base for biofuels playing an important rolein a low carbon economy, it is aware that certain sectors have fewer alternative fuel options
than others. Taking into consideration the previous point, excluding biofuels from theTransport Criteria signals to the market that biofuels have a greater potential for
decarbonising sectors such as aviation, where green alternative fuels are far less viable.
There is consequently less likelihood of different sectors competing for a limited supply of
biofuels and driving more of the issues previously outlined.

•

One of the principles set by CBI when updating sector criteria is that of no backsliding.
Allowing biofuels into the criteria would represent relaxing standards to a wider scope of
potential fuels, which would go against this principle.

Ultimately, a pivotal reason for excluding biofuels from the Transport Criteria was impracticality. Any
inclusion of biofuels in the criteria would have followed suite from the EU Taxonomy on Sustainable
Finance, whereby only vehicles using 100% approved biofuels in road freight or interurban scheduledroad transport (i.e. coach transport) would be eligible. However, it was deemed that verification of thisrequirement would be difficult (and potentially impossible) to carry out and onerous on the bond issuer,
as any vehicle that can run on biofuel (specifically biodiesel) can also run on traditional fossil fueldiesel. Moreover, there are few if any examples of geographic regions or localities where biofuelinfrastructure supports of 100% biofuel use in HDVs or coaches.

66

IPCC, 2014: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working
Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change

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As such, Climate Bonds does not set requirements for biofuels that, ultimately, are extremely difficult
to either meet or verify. However, what can be controlled is the production of biofuel itself, which is
captured in the Climate Bonds Bioenergy Criteria.
Note: in many countries, standard petrol grades have a small percentage of biofuel in them. For
example, current petrol grades in the UK contain up to 5% bioethanol, known as E5. It is proposed toincrease this to up to 10% (E10)67. It would be unfair to exclude vehicles using such blends of biofuels
when it is out of their control. This is why only vehicles which are explicitly designated as biofuel
vehicles are excluded. In such a case, vehicles need only meet the rest of the criteria relevant to themand will not be automatically excluded otherwise.

4.1.12

Inclusion of Hydrogen in the Transport Criteria

Some of the supporting rationale for including hydrogen as an eligible fuel in the Transport Criteria isalready detailed in section 1.1.5. This section goes further in highlighting the discussions that took
place around its inclusion and elaborating on the arguments given in 1.1.5.
The manufacture of hydrogen is currently a carbon intensive process, but developments in technology
such as blue hydrogen (hydrogen produced via steam methane reforming) and in particular greenhydrogen (produced via electrolysis powered by renewable energy) mean the carbon footprint could
be significantly lowered in the future. The EU Taxonomy on Sustainable Finance now includes
emissions thresholds for hydrogen manufacturing, while the Technical Expert Group (TEG) Transport
sub-group for the taxonomy recognised that hydrogen will be a crucial element in decarbonising thetransport sector.
There are arguments to suggest that, in many cases within the transport sector, electricity should stillbe the energy source of choice over hydrogen. This is partly due to hydrogen’s high operating costs
owing to inefficiency and energy losses in its production 68 . Despite this, bearing in consideration
expected renewables proliferation in the future and improvements to grid systems and energy
infrastructure, hydrogen will still be a crucial part of green transport solutions in the short- to long-term.
These criteria aim therefore to signal to the market that both electricity and hydrogen are low carbon
solutions needed to decarbonise transport. It is up to policy makers and practitioners to know which
option is most appropriate in each situation.
Despite the inclusion of hydrogen as automatically eligible in these criteria, it is well noted thathydrogen has differing levels of potential in different sectors based on sector needs to decarbonise
and access to alternative clean fuel options within these sectors. Transport, for example, has accessto electrification solutions across many modes, as well as flexibility in terms of modal shift.
Manufacturing and heavy industries, on the other hand, currently have fewer viable low carbon
alternatives. For example, steel production is a process for which electrification from renewables is
not expected in the short- to medium-term, while some applications for hydrogen are being exploredat scale69. Climate Bonds would therefore like to note that any coordination of a limited supply of greenhydrogen should take note of these different sector needs, weighing up the appropriate options foreach.
It is noted also that some elements of a future hydrogen economy and infrastructure are already inplace, to an extent (for example gas pipe infrastructure and terminals). However, natural gas pipes arenotably different to those that would transfer hydrogen. There may therefore be key differences andtrade-offs in short-term investments and long-term carbon and financial savings between hydrogenand electrification, depending on the specific case in point.

67

https://www.rac.co.uk/drive/advice/emissions/what-is-e10-fuel-and-how-could-it-affect-you/
http://www.csrf.ac.uk/2020/02/blog-long-haul-lorries-powered-by-hydrogen-or-electricity/69
http://www.hybritdevelopment.com/steel-making-today-and-tomorrow
68

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Lastly, hydrogen production is experiencing an increase in policy support and visibility as a componentof a low carbon economy. For example, the Scottish government has set out plans to become a futurehydrogen hub, while the German government has adopted a National Hydrogen Strategy to increase
production70.

4.1.13

Decarbonising road freight

Road freight represents a particularly challenging area of transport to decarbonise compared to otherareas of transport. Trucks are the fastest growing source of global oil demand, accounting for 40% of
the oil demand growth by 2050 and 15% of the increase in global CO2 emissions71. At the same time,
there are fewer opportunities for clean fuels in road freight as might be seen in private passenger
vehicles, for example. As discussed in section 1.1.7, biofuels may be a short-term option in somecases, but are ultimately unsuitable as a long-term solution.
Modal shift will be a key part of decarbonising freight as a whole. The carbon footprint of transporting
goods via rail is amongst the lowest across all modes of transport, and considerably lower than by
HDV. The thresholds set in the Transport Criteria are based off the Global Fuel Economy Initiative(GFEI) projections and aim to reflect preference towards rail freight transport as there is nodifferentiation in thresholds between different modes and the thresholds correspond to low emissions
road freight vehicles. In this way high performing road freight vehicles will always be able to meetcertification, but there is also a clear signal to the market that rail freight should be the obvious choicefor decarbonising freight in general. See section 4.3.3 for further explanation of freight thresholds.
Even in a scenario where there is a significant shift to rail transport of goods, HDVs and trucks will
inevitably be needed, especially in the case of ‘last-mile’ journeys (the transport of goods from atransportation hub to the final destination). Innovations and developments in electrification andhydrogen technologies for trucks will therefore be crucial, and policy and financial initiatives mustreflect this while also supporting continued research and development into these technologies. Vehicle
and logistics efficiency are both equally key aspects to prioritise, especially in the short-term.

4.1.14Fleet averages for emissions and meeting the thresholds

Between publication of V1 of the Transport Criteria and the update to V2, there were queries raised
regarding whether the universal thresholds could be met using a fleetwide average. In essence this
could mean some vehicles or activities being financed would not meet the threshold, but overall the
fleet would meet the threshold as an average. For all cases of issuance seeking certification underthese criteria, such calculations of emissions are not eligible. For example, if a vehicle manufacturer
is seeking certification, each vehicle to be financed must meet the appropriate threshold.
However, it was acknowledged that situations could arise whereby a fleet operator may be financing
operation of a fleet which meets the threshold overall, but has difficulty knowing what the emissions
intensity of each vehicle is. A good example might be of public transport bus fleet which might be madeup of a mixture of electric and fossil fuel vehicles, while having variable ridership from vehicle to vehicle.
This makes fuel consumption per passenger-km and thus the emissions intensity of each vehicle in
the fleet difficult to calculate and report on.
While bond issuances financing such activities are rare, to accommodate such an instance, thesecriteria allow operators of a fleet of vehicles which transport public passengers (including taxi fleets)
to use a fleet average where ridership or emissions intensity data for each vehicle is not known. Bestpractice, however, would be for every vehicle being financed to meet the threshold. This exemption
70
71

Both examples were announced in 2020
ITF (2018) “Towards Road Freight Decarbonisation Trends Measures and Policies”, ITF Policy Papers, OECD Publishing, Paris.

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will only be available up to 2025, after which point (2026 onwards) all vehicles will have to be zero
emissions (see section 4.3.2). Note that fleets certified prior to 2026 under this rule will not havecertification removed after 2026 if no longer meeting the threshold.

4.1.15Bus Rapid Transit

Table 7 outlines how Bus Rapid Transit (BRT) systems are eligible not under the Transport Criteria,
but instead are addressed separately in the Climate Bonds Standard BRT Criteria.
However, for extra clarification, the BRT Criteria are only intended for BRT projects and initiatives totake place in developing countries (as determined by the OECD). For BRT systems to be implemented
or financed in developed countries (again as determined by the OECD), these systems must meet theappropriate requirements of the Transport Criteria.

4.1.16

Interurban scheduled road transport

Interurban scheduled road transport was not explicitly included in scope in V1 of the Transport Criteria.
With V2 seeking to better align with other best practice green taxonomies, most notably the EU
taxonomy on sustainable finance, it became clear that the Transport Criteria V1 did not suitably allow
for such assets and activities.
These assets and activities essentially include interurban coach and bus travel for public passengers.
As such, these asset and activity types mirror public transport assets and activities in theirrequirements. This is because, while the future of most sustainable medium- and long-haul passenger
travel may lie in rail (and depending on technological developments, aviation), this is still today
preferable to individual car journeys in ICE vehicles.
However, currently there are considerable challenges associated with electrifying this category ofvehicle for interurban routes, something the EU taxonomy acknowledges. The EU taxonomy hence
allows for a narrow range of biofuel vehicles in this category to be eligible in order to provide someleeway for such vehicles if also low emissions. However, the Transport Criteria continue to exclude
biofuel vehicles generally in the criteria for the same reasons as put forward for road freight, forexample (see the rationale in section 4.1.11).
Moreover, it is expected that zero- or low-emissions vehicles of this category will be increasingly
common in the near-future. As such, while it is acknowledged that bond issuances of such assets oractivities may be limited in the short-term, Climate Bonds expects to see these requirements asrealistic in this timeframe.

4.1.17

Dedicated fossil fuel rail transport – accuracy of percentages

The EU taxonomy acknowledges uncertainties in setting a maximum percentage of dedicated fossil
fuel freight transport in order to be eligible, noting difficulties in knowing, particularly ex-ante, howlocomotives will be used over the lifetime of the investment. As such, the taxonomy instead opts toclassify ‘dedicated’ as assets 100% used to transport fossil fuels. This allows much easier verificationof whether assets are completely dedicated to such uses.
While these criteria accept this rationale, experience with previous issuances of freight rail meeting
this requirement for certification give sufficient confidence that issuer evidence of a 25% thresholdbeing met can be trusted by verifiers. Moreover, aligning with the EU taxonomy in this regard would
represent a backslide in standards, which goes against the principles of Climate Bonds criteria
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Climate Bonds Initiative Land Transport Background Document

development. For example, a 25% limit would increase to 100%, meaning Climate Bonds certification
could result in a bond financing freight rail for which 99% of its cargo transported is fossil fuels.

4.1.18

Information and Communication Technology (ICT) assets

The Transport Criteria stipulate that ICT assets and activities in transport are eligible on a case-bycase basis (see section 4.4.7). Climate Bonds explored whether more specific assets or activities could
be outlined which are eligible or ineligible. However, TWG input stressed that the true impact of ICT
on emissions is difficult to evaluate as it ultimately supports an application or transport mode that may
reduce emissions, rather than reducing emissions itself.
Nonetheless, to provide further guidance for issuers who include ICT applications for transport in theiruse of proceeds, when evaluating such assets on a case-by-case basis, Climate Bonds will be looking
for strong evidence that the ICT will result in a considerable reduction in emissions. For example, an
ICT system which improves traffic flows in a city. Clear benefits to mitigation will be accepted.
However, where benefits may be less clear, or the ICT is not integral or necessary to the transportsystem, Climate Bonds may ask for the issuer to provide evidence that at least a 25% reduction inemissions on a system level is achieved by the ICT. However, Climate Bonds reserves the right tomake exclusions in certain cases even if this figure is met.
ICT that is integral and necessary infrastructure to transport that would be eligible under these criteria(for example ICT for a metro system) will also be eligible.

4.2

Definitions and key terms

Heavy Goods Vehicles vs. Heavy Duty Vehicles
Concerning freight transported by road, generally there are two terms that are seen commonly to cover
the vehicles responsible (for example, trucks or lorries): Heavy Goods Vehicles (HGVs) and Heavy
Duty Vehicles (HDVs). HGV is commonly used in the UK while in EU policy language HDV iscommonly the term of use. Large Goods Vehicle (LGV) may also be seen as a term in the EU for thesame classification of vehicles. In any case, all these terms classify the same type of vehicle and, toalign with EU policy language (for example the Taxonomy on Sustainable Finance), HDV is the term
leveraged in the Transport Criteria.
An HDV is defined according to EU Directive 2001/116/EC as follows:
Vehicles used for the carriage of goods and with a gross combination mass (GCM)* of over 3,500
kilograms (3.5 tonnes) or 7,716 lb*Gross Combination Mass can be defined as:
The maximum allowable combined mass of a road vehicle, the passengers and cargo in the tow
vehicle, plus the mass of the trailer and cargo in the trailer

Transport Corridors
Relevant to section 4.4.3 in this document.

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Climate Bonds Initiative Land Transport Background Document

Simplified from the World Bank definition72, a transport (or transportation) corridor is classed as:
One or more routes that connect economic centres (for example urban areas) within and acrosscountries

Light Commercial Vehicles
A commercial carrier vehicle with a gross vehicle weight of no more than 3.5 metric tons (tonnes). A
van is a well-known example in European countries.
Acronyms
o
o
o
o

4.3

BRT – Bus Rapid Transit
EV – Electric Vehicles
ICE – Internal Combustion Engine
CNG – Condensed Natural Gas

Overarching issues and considerations (Version 2 update)

The following discussion outlines the issues and considerations that arose in the Transport Criteria
update which may previously have not been pertinent in V1 of the criteria.

4.3.1

Principles of updating Climate Bonds sector criteria

Any updates carried out to Climate Bonds criteria must follow the following principles:•‘No backsliding’. In updating thresholds and requirements for showing compliance with
criteria, there must not be a relaxing of standards. In other words, they must at the very least
maintain the same level of ambition. Scope of eligibility may widen in the event that certain
assets or activities have developed or been proven to hold significant mitigation or adaptation
value.

•

Climate Bonds criteria represents best practice mitigation (and adaptation and resilience)measures in a given sector in the context of a path to decarbonisation and a 1.5-degree
warming scenario. In other words, it should not be less strict than other prominent green
standards and taxonomies (within reason).

•Continued scientific robustness. Criteria updates must continue to be made using the mostrecent and sound scientific evidence, with final approval from the TWG.

•

Any key technical or content changes must be recorded and published for transparency.

4.3.2

Updating the emissions thresholds in the Transport CriteriaWith the EU Taxonomy being published to include thresholds for land transport assets and activities,
Climate Bonds evaluated similarities and gaps between it and the Transport Criteria. This would
provide an important perspective on where gaps in scope might exist within the Transport Criteria or
where technical mitigation requirements are weaker than those in the Taxonomy.
72

Further details of the World Bank definition can be found here:
http://documents1.worldbank.org/curated/pt/441171468315291413/pdf/384590Internat1e0corridors01PUBLIC1.pdf

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With the Taxonomy planned to be enshrined as binding European legislation for sustainable financeactivities, it is important that Climate Bonds criteria are well aligned with this Taxonomy, except incases where Taxonomy standards might be lower (see the previous section). Therefore, in cases
where Taxonomy emissions thresholds for transport are stricter (and thus lower), the Transport Criteria
thresholds have been updated to align with this.
In V1 of the Transport Criteria, both freight and passenger transport, respectively, had to meet specificemissions thresholds based on projections and targets set by the Global Fuel Economy Initiative(GFEI). The GFEI promotes and supports government action to improve the energy efficiency andreduce the fuel consumption of the road vehicle fleet73. At the time of publication of V1, these GFEI
targets were heavily based on and developed using the IEA 2 Degrees Scenario (2DS). Targets wererobustly set using modelling and calculations carried out by technical experts. These represented
realistic yet ambitious emissions thresholds for transport practitioners to meet when seeking
certification. Reference emissions levels were taken from 2005, with gradually decreasing thresholds
towards 2050.
The Taxonomy, however, has taken an approach which sets a threshold of 50g CO 2 / km or p-km forpassenger transport or private LDVs until 2026, at which point the threshold becomes zero. This isreflective of an ambitious need for new vehicle stock to be zero-emissions in the medium- to long-term,with the entire fleet eventually being zero-carbon. With these thresholds being lower than thosepreviously in the Transport Criteria (see figures 2 and 3), the Transport Criteria have subsequently
been updated to align with these thresholds. An exception for the time being is freight transport, which
is discussed in the next section (4.3.3).
Global applicability is a crucial feature for any Climate Bonds criteria. As such it was important toensure the updated thresholds meet this requirement, as the EU Taxonomy centres aroundsustainable finance and economic activities within the European Union. As such there was a possibility
that these thresholds would be unrealistic to meet in certain countries. For example, it could beenvisioned that in more developing countries the targets for passenger rail or private cars are difficult
to meet as a lack of transmission and distribution infrastructure (electrical grid) means that electrictransport is an unsuitable investment in the short- to medium-term.
However, Climate Bonds engaged with technical experts involved in the process of developing theTaxonomy, who held the view that the thresholds are nonetheless realistic and, more importantly,
necessary on a global scale. Combined with global sustainable development goals as a whole, it isimportant to signal to the market that ambitious greening of transport is entirely feasible if done inparallel with other sectors such as electrical grids and renewable energy production.
Below is illustrated the disparity between the thresholds of the Transport Criteria (V1) and the EU
Taxonomy:

Figure 3. Passenger Transport Thresholds (e.g. cars and light-duty vehicles).

73

See https://www.globalfueleconomy.org/media/708302/gfei-working-paper-20.pdf for the latest working paper of the GFEI

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Figure 4. Freight Transport Thresholds (e.g. freight transport by road).

4.3.3

Freight thresholds in the Transport Criteria

As is seen in Figure 4, in the current absence of freight thresholds in the EU taxonomy, freightthresholds in the Transport Criteria are kept as is in the previous version (V1). This means they reflect
projections for fuel emissions reductions developed by the GFEI and IEA.
The EU taxonomy will eventually adopt thresholds for freight based on a benchmark that is 50% lower
than average reference CO2 emissions of HDVs as defined for the Heavy Duty CO2 Regulation. Once
this is published, Climate Bonds will review this threshold to determine whether this will be suitable toadopt in the Transport Criteria, using the same principles as for the passenger threshold(s).

4.3.4

Dedicated rail transport of fossil fuels

Version 1 of the transport criteria stipulated that railway lines or rolling stock carrying freight of whichmore than 50% was fossil fuels were not eligible. This was always intended as a starting point thatwould decrease over time in line with the necessary decrease in fossil fuels as part of the energy
demand mix. Coal makes up the biggest bulk (in tonnage) by far of any fossil fuel transported by rail,
though this varies from country to country. Noting this, coal makes up around one third of freight
tonnage transported by rail in both the USA and Russia, and only 7% in the UK. In broad terms, thismay indicate that the 50% threshold was always a conservative target, although notable exceptions
exist in countries such as China (in which nearly 60% of freight tonnage transport by rail is coal).
This requirement for rail freight is now lowered to 25% to reflect the need for reducing fossil fuel’s rolein the economy and to send a signal to the market that transporting fossil fuels can lock-in their futureuse. This threshold will continue to be reviewed and tightened in future versions of these criteria, inline with better scientific and market knowledge. A gradual decrease to this threshold over time will
give leeway to issuers financing freight rail that carries other commodities in addition to fossil fuels andtherefore can aid modal shift and emissions decreases.
Note that for fossil fuels transported by road, this is not eligible in any circumstance.

4.3.5

Inclusion of zero direct emissions vehicles from other sectors

There are some assets that might support sectors such as aviation or construction which whilethemselves are not strictly green today, will continue to be key features of future economies, even lowcarbon ones. Equally, such vehicles may not fall intuitively into the other categories in these criteria
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yet for certain issuers may form a significant part of their activities. Therefore, with transition
imperatives in mind and thus accepting all aspects of these sectors will need to decarbonise in linewith the Paris agreement, the manufacture of mobile vehicle assets used in these industries areincluded as eligible under these criteria, providing those vehicles are zero direct emissions.
For retail, this may include buggies which transport consumers round a retail park. For construction, it
may include off-road diggers. If an issuer wishes to finance the manufacture of zero emissions vehicles
that supports a sector such as those already mentioned, then Climate Bonds sees no reason to
exclude such vehicles.
Only the manufacture of such vehicles, rather than their operation or purchase, is eligible. Reasonsfor this are twofold. Firstly, issuers such as banks may not have access to such granularity of detail inthe projects that they are financing. For example, a bank issuing a bond to finance a new railway line
will not be able to disclose whether construction equipment used in the project are zero emissions.
Secondly, based on experience with certifications, a significant number of certified issuers would beunable to meet this requirement of included assets being zero direct emissions. Climate Bonds will
review this eligibility when zero direct emissions vehicles are more common in the market, andinformation on such vehicle use is more commonly disclosed to issuers.
One exception to this is waste collection vehicles. The operation and leasing of such vehicles (if zero
direct emissions) is also eligible under these criteria.

4.3.6

Incorporating scope 2 and scope 3 emissions into the Transport Criteria

There is consensus that the best way of evaluating an asset or activity’s complete emissions footprintis through Life Cycle Approach (LCA) or Life Cycle Engineering (LCE). For a transport asset, this fully
shows associated emissions all the way from construction or manufacturing up to decommissioning(cradle-to-grave). As a systems-oriented assessment framework it helps understand the complexity,interdependencies, and impacts of infrastructure systems.
While such frameworks are becoming more routine in assessing transportation systems performance,
they are not universally practiced. The EU taxonomy does not set emissions requirements on an LCA
basis for transport as it does for some economic activities such as manufacturing of plastic or the
production of electricity from Solar Photovoltaic (PV). It does, however, stress the need for a common
Union methodology (and subsequent legislation) for the assessment and the consistent data reportingof the full life-cycle CO2 emissions of heavy-duty vehicles that are placed on the Union market.
Climate Bonds stresses the need for such initiative to be shown for all types of transport. However, as
it stands LCA approaches are considerably more onerous and complex than what is currently requiredin the Transport Criteria (that of emissions intensity thresholds). As such, it is recognised that setting
LCA requirements in the Transport Criteria would require considerable technical input andunderstanding of industry practice, further than what has already been leveraged in drafting thesecriteria. See section 4.1.10 for full rationale of this approach.
It is proposed that a priority for the next update of the Transport Criteria should focus fully on
implementing such approaches into its mitigation requirements. An example of why this would bevaluable is the case of electric battery vehicles. While accepted as the obvious transport solution forpassenger cars, LDVs and perhaps even HDVs, there are considerable questions asked of the mineral
requirements associated with such battery technologies. Future manufacturing and use of products
will thus have a wide range of emissions associated with mineral extraction, for which full life cycle
analysis understanding will be needed. Further discussion of this issue is provided in the next section.

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4.3.7

Mining and minerals

Criteria do not currently exist for the mining of minerals and materials used in the low carbon transport
sector. However, it is acknowledged that they are a crucial part of vehicle manufacturing and the useof batteries in electric vehicles, amongst various other uses. With projected increases in sales and useof such vehicles and thus increased demand of necessary minerals, there will be a need in future toreview criteria in the context of sustainable resource extraction for such uses.
The previous section discussed this in light of lifecycle emissions, pertinent because it is estimatedthat primary mineral and metal production accounted for approximately 10% of the total global energyrelated greenhouse gas emissions in 201874. However, along with other non-climate environmental
issues (such as biodiversity loss), there are also considerable social issues associated with mineral
extraction, often taking place in developing countries where the risks of modern slavery and lack of
employee safety are widespread and difficult to prevent75. For this reason, while LCA approaches will
help encompass associated emissions in mining, further criteria on these other complex issues willneed developing in the long-term. There already exists the OECD Due Diligence Guidance for
Responsible Mineral Supply Chains, for example, but it is unclear whether more specific standards
exist for use in the bond market.

4.3.8

Disclosure of transport compliance data

In bond markets, issuers are generally not required to be explicit in their use of proceeds. The Climate
Bonds Standard is a pioneering effort to promote transparency on intended use of proceeds andindependent review of proceeds management, thereby holding issuers accountable for activities andoutcomes. Disclosure on use of proceeds is an important factor for all sectors that green bonds areissued in. For that reason, the requirements around disclosure are stipulated in the Climate Bonds
Standard and not the Sector Criteria76.
However, the TWG supported additional disclosure requirements for issuers to meet the Transport
Criteria, in providing compliance data used to meet the requirements relevant to them. This could betheir emissions data or independent project appraisal, for example. This is intended to drive bestpractice in the transport sector, something that is crucial for providing investors and policy makers with
better information for green decision making. With disclosure of climate-related financial informationand data increasingly observed, transport is a key sector that must align with such initiative.

4.4

Mitigation Requirements

Mitigation requirements for the Transport Criteria have been set depending on transport type. The
following sections give the requirements separately for passenger cars and commercial vehicles,
public passenger transport by road, freight transport by road, passenger rail rolling stock, freight rail
rolling stock, railway networks and lines, and infrastructure for low carbon transport.
If a bond contains public transport projects and infrastructure for low carbon transport projects, forexample, the public transport projects must comply with the public transport requirements and theinfrastructure for low carbon transport projects must comply with the infrastructure for low carbon
transport requirements. This holds for any bond with any mixture of project or asset types.

4.4.1

Automatic eligibility

74

https://sustainabilitycommunity.springernature.com/posts/59131-the-climate-footprint-of-mining
Mancini & Sala (2018)76
The requirements of the Climate Bonds Standard can be found here: https://www.climatebonds.net/standards/standard_download
75

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All zero direct emissions transport along with key components and dedicated supporting
infrastructure are automatically eligible and therefore certifiable under the Transport Criteria.
Note: for some asset categories that are zero direct emissions, additional criteria will need to be met.
Consult Table 6 for further details.

4.4.2

Universal emissions thresholds

Figure 2 presents the EU taxonomy emissions targets for p-km in 2020 through to 202577, after which(2026 onwards) they drop to zero, and IEA 2DS emissions targets for t-km in 2020 through to 205078.
Supporting methodological notes are provided for additional aid in using the thresholds.
Table 4. Universal emissions thresholds for passenger and freight activity
Year of IssuanceDirect Emissions

2020

2026

2030

2050

Passenger Activity Threshold (g CO2eq per p-km)

50

0

0

0

Year of IssuanceDirect Emissions

2020

2030

2050

Freight Activity Threshold (g CO2eq per t-km)

25

21

18

Methodological note 1: Using the thresholds
The threshold to be used by the issuer for certification is the starting year of the bond (year of
issuance). As an example of how the thresholds should be used, a bond for rail freight issued in 2020should meet the threshold for 2020 for the lifetime of the bond, in this case 25g CO2 per t-km.
Methodological note 2: Fleet Averages
For bonds financing vehicle fleet operation or manufacturing, fleetwide averages cannot be used toshow compliance with the thresholds. Each vehicle must meet the threshold. The only exception is forvehicle fleets that transport public passengers – for example public bus fleets or taxi companies. Moreinformation can be found in the corresponding background paper, section 4.1.14.

Methodological note 3: Using load factors to calculate emissions intensity77

For passenger transport, the thresholds align with the EU taxonomy on sustainable finance, based off reference data that gives abenchmark for low emitting vehicles across all modes of transport. In 2020, this is set at 50g CO 2 per p-km until 2025, after which (2026
onwards) only zero emissions vehicles (0g CO 2 per p-km) will be eligible.
78
Mobility Model (MoMo) data, ibid, provides global stock-wide average of emissions where, to qualify in 2020, assets need to performbetter than the Global Fuel Economy Initiative (GFEI) target accounted for in the IEA 2 Degree Scenario (2DS) emission targets (50%better fuel economy for new vehicle registrations by 2030, compared to 2005).

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For relevant fossil fuel or hybrid vehicles or rolling stock needing to meet the thresholds, the project,product or supporting infrastructure passes if:
vehicle emissions per km when fully loaded
load factor x full capacity<

passenger (per p-km) or freight (per t-km) threshold

Example:A municipality in the USA borrows money to replace a large proportion of its public bus fleet. Eachnew bus has 50 seats and emits 437 gCO2/km when fully loaded. Buses are 30% full on average
across all routes and times. A bond issued to pay for the buses is eligible under the Criteria if:
437
0.3 x 50
the case)= 29.1 gCO2/p-km<

universal passenger (per p-km) threshold(likely to be

Example:A private locomotives company in China borrows money to replace a large proportion of its freightrolling stock. Each new train can transport up to 3000 tonnes of cargo and emits 30,000 gCO2/km
when fully loaded. Trains are 60% full on average across all routes and times. A bond issued to pay
for the trains is eligible under the Criteria if:
30000
0.6 x 3000
case)

= 16.6 gCO2/t-km<

universal freight (per t-km) threshold(likely to be theMethodological note 4: load factors of passenger cars and commercial vehicles
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 as gCO2/km.
As such there is no need to calculate average ridership, for example.

Additional notes
Thresholds currently do not differ between geographical regions and there are separate thresholds forpassenger transport and freight transport.
For freight transport, a threshold has not yet been set in the EU taxonomy. This will be 50% lower than
average reference CO2 emissions of HDVs as defined for the Heavy Duty CO2 Regulation, for whichdata will be available in the future. It should be noted that, in a situation where a subsequent thresholdfor freight in the EU taxonomy is lower and thus more stringent than what is currently stipulated in theTransport Criteria, such a threshold would be adopted in these criteria in future versions to reflect thehighest green standards. Vice versa, these new thresholds would not be adopted into these criteria
once known to avoid backsliding on standards.

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4.4.3

Exclusion of dedicated fossil fuel transport

Railway lines and rolling stock
Infrastructure and rolling stock for railway lines that are built with the over-riding objective oftransporting fossil fuels do not qualify under the Criteria. That is if:a) The primary purpose of the line is clearly described as fossil fuel freight by authoritative
government sources; or, in the absence of this:b) More than 25% of the freight in t-km transported by the line is comprised of fossil fuels*; oralternatively:c) More than 25% of the rolling stock is dedicated to the transport of fossil fuels*This can be demonstrated by issuers a number of ways:ooo

For operators of railway lines and rolling stock, receipts may provide data that establish thetonnage of fossil fuels transported as a percentage of total freight transported on the line.
Lessors of rolling stock financing operations may demonstrate using their own internal datathat the percentage of their clients that are engaged in fossil fuel activities or transport is
below 25%.
For banks issuing a bond in order to lease rolling stock, data may be provided which
demonstrates that the proportion of rolling stock dedicated to fossil fuel transport is below
25%.

Road vehicles
For road freight vehicle and component manufacturers, purchasers and operators (see Table 6), any
proportion of a vehicle’s or fleet’s cargo being made up of fossil fuels makes that vehicle or fleet
ineligible and thus not certifiable.

4.4.4

Exclusion of biofuel vehicles

Road vehicles or rolling stock designated as using biofuels, even partially, do not qualify under these
Criteria, even if meeting the relevant threshold for passenger or freight transport. The same exclusion
rule holds for railway lines or networks that are being financed on which biofuel rolling stock will run.
Note: vehicles or rolling stock using petrol blends containing small percentages of biofuels as seen insome countries are still eligible so long as they meet the rest of the criteria relevant to them.

4.4.5

Independent project appraisals for new interurban rail transport

For new interurban rail projects (including high-speed rail and dedicated freight lines):
A project only qualifies if an independent project appraisal demonstrates that the investment will
reduce total transport related greenhouse gas emissions (per p-km or per t-km) in the affectedtransport corridor by at least 25%.
Guidance on project appraisals
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In the development of a new interurban rail project, it may already be subject to carbon accounting orappraisal procedures that could provide additional information. The project developer may thus havealready chosen prior to pre-issuance an external party to develop the methodology or which owns asoftware tool that can provide the analysis. This may be a transportation planning software or similar.
In general, there are no specific requirements on the type of appraisal that is needed. A study
commissioned by the project developer to determine the level of emissions reductions would be
accepted as an appropriate appraisal. The two key factors that will be used to evaluate whether the
study is suitably robust are:a) the developer has used reputable sources for references and emissions factors (for example
government agencies, UNFCCC79, IEA, EEA) and;b) that the Verifier has checked and approved the study.
Assuming then that the study projects a minimum 25% emissions reduction in the transport corridor,
the bond will suitably meet this criterion.
A range of greenhouse gas emissions methodologies and calculators exist for railway lines including,but not limited to: IFEU 2011, RFF-SNCF-ADEME 2011, NTNU 2011, UIC 2011, and AEA-CE DelftTNO 2012.80 However, it is accepted the issuer will likely have identified its own appraisal methodology
to meet this requirement. As such, the Climate Bonds Initiative do not specifically require or makedistinctions between any type of appraisal or methodology and these are intended simply as examples
for context.
Note that for bonds refinancing existing interurban rail projects, the issuer need not meeting thisrequirement.

79

The UNFCCC Clean Development Mechanism (CDM) illustrates one such example of a GHG methodology for modal shift from road torail or sea in freight transport: https://cdm.unfccc.int/methodologies/DB/4DOIK2WYP8P3AGAVJKT0CHY1NXJ4QP
80
These example methodologies were taken from the following study, but is not necessarily an exhaustive list::
https://uic.org/IMG/pdf/carbon_footprint_of_railway_infrastructure.pdf

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4.5
4.5.1

Decision trees for asset categories
Passenger cars and commercial vehicles

Resulting Criteria

Note: for passenger cars and commercial vehicles, the load factor used in meeting the thresholds (ifrelevant) should always be one passenger. As such, the metric can be gCO2/km in practice.

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4.5.2

Public passenger transport by road

Resulting criteria

Note: for Bus Rapid Transit systems in developing countries (as defined by the OECD), the BRT
Criteria81 under the Climate Bonds Standard should be used. For such systems in developed
countries (OECD defined), the Transport Criteria should continue to be used.

81

https://www.climatebonds.net/files/files/standards/Land%20transport/final_brt_criteria_and_guidelines.pdf

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4.5.3

Freight transport by road

Resulting Criteria

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4.5.4

Passenger rail rolling stock

Resulting Criteria

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Climate Bonds Initiative Land Transport Background Document

4.5.5

Railway networks and freight rail rolling stock

Resulting criteria

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4.5.6

Miscellaneous vehicles for other sectors

Resulting criteria
The manufacture of miscellaneous vehicles used in other sectors that are zero direct emissions, e.g.
off-road diggers, are automatically eligible and therefore certifiable

Waste collection vehicles
In addition to their manufacture, the operation and leasing of waste collection vehicles that are zero
direct emissions is also eligible under these criteria
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4.5.7

Infrastructure for low carbon transport

Resulting criteria
The following other infrastructure types are automatically eligible and therefore certifiable:••••

Dedicated charging and alternative fuel infrastructure (when separable from fossil fuel filling
stations and garages)
Retrofits for public transport infrastructure
Public walking and cycling infrastructure; cycling schemes
Construction and development, purchase, and/or operation of dedicated infrastructure for
eligible rolling stock, railway lines and networks, for example: train and bus stations,inspection depots for freight rail rolling stock, traction maintenance depots / motive power
depots for rolling stock, backup electricity generators, signalling infrastructure including
buildings

The following infrastructure types are eligible on a case-by-case basis** and may include thefollowing:••••

ICT that improves asset utilization, flow and modal shift, regardless of transport mode (public
transport information, car-sharing schemes, smart cards, road charging systems, etc.).
Intermodal freight facilities
Investment in terminals to improve journey times
Smart freight logistics

The following other infrastructure encourage maintained or increased ICE vehicle use patterns andare ineligible and therefore not certifiable:••

New roads, road bridges, road upgrades etc.
Parking facilities*These are intended merely as examples. The principle is that many types of vehicles exist which may not fall easily or intui tively into theother categories in these criteria yet form a significant part of an issuer’s transport assets and activities. This requirement is intended to allow
for such instances. Other examples may exist which, providing they are zero direct emissions, are eligible under these requirements.
**The infrastructure types listed in box 2 are evaluated for certification on a case-by-case basis by the Climate Bonds Initiative. A 25%
emissions reduction benchmark is intended as last resort if it is uncertain how effective or necessary the infrastructure assets are todecarbonisation. If Climate Bonds is not satisfied with the general information provided by the issuer to the verifier then it will request
demonstration of such a reduction, or vice versa.

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4.6

Fossil fuel filling stations

Reporting requirements

Reporting on the use of proceeds for a Certified Climate Bond is required at three stages:
1. Pre-issuance – before issuing the bond the issuer must engage with the verifier to confirm
use of proceeds are aligned with the requirements of the Climate Bonds Standard
2. Post-issuance – after issuing the bond the verifier confirms that use of proceeds, once
allocated, remain aligned with the requirements of the Climate Bonds Standard andTransport Criteria
3. Annual reporting – the issuer must prepare a simple report each year for the term of the bondto confirm that use of proceeds are aligned with the requirements of the Climate Bonds
Standard and the Transport Criteria
The above are the overarching reporting requirements as laid out in the Climate Bonds Standard 84.
This is to both prove compliance and to promote stronger disclosure of use of proceeds from issuers.
All requirements for certification must be maintained in compliance for the duration of the bond.
Additional disclosure requirements – version 2
Version 2 of the Transport Criteria now stipulates additional disclosure requirements for issuers toprovide at the pre-issuance reporting stage. All data or information, numerical or otherwise, used toprove compliance with the criteria must be provided in the independent verifiers report.
For example, emissions data in accordance with the universal thresholds or freight data to prove lessthan 25% fossil fuel transport dedication for freight rail.

84

Further information about the Climate Bonds Standard can be found here:
https://www.climatebonds.net/standards/standard_download

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Appendix 1: TWG members
Members of the Low Carbon Transport Technical Working Group
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Heather Allen, Transport Research Laboratory
Lewis Fulton, Davis Institute of Transportation Studies, University of California
Michael Replogle, Institute for Transport and Development Policy
Gary Hoffman, GM Hoffman Consulting
Elizabeth Deakin, Berkeley Institute for Environment Design, University of California
Karl Josef-Kuhn, Siemens
Cornie Huizenga, Partnership on Sustainable, Low Carbon Transport (SLoCaT)
Benoit Lefevre, World Resources InstituteArie Bleijenberg, Koios Strategy / The Netherlands Organisation for Applied Scientific Research(TNO)
Prof. Dr. Danang Parikesit, Indonesian Transport Society / Universitas Gadjah Mada
Carol Lee Rawn, Ceres
John Dulac, Organisation for Economic Co-operation and Development (OECD), previouslyInternational Energy Agency (IEA)
Pierpaolo Cazzola, International Transport Forum (ITF) / OECD, previously International Energy
Agency (IEA)

Special thanks go also to Peter Anderson of the European Investment Bank (EIB) and Andreas
Barkman of the European Environment Agency (EEA) for their kind input and engagement.

Appendix 4: References
Citations• Chen, S., Wu, J. and Zong, Y. 2020. The Impact of the Freight Transport Modal Shift Policy on
China’s Carbon Emissions Reduction. Sustainability, 12(2), p.583.
• Decarbonising transport. Setting the challenge. 2020. UK Department for Transport. Available
from:https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/fil
e/878642/decarbonising-transport-setting-the-challenge.pdf• Eckelman, M.J. 2013. “Life cycle assessment in support of sustainable transportation”.
Environmental Research Letters, 8(2), p.021004.
• GFEI (2015) Fuel Economy State of the World 2016: Time for Global Action. Global Fuel
Economy Initiative, London http://www.globalfueleconomy.org/media/203446/gfeistate-of-theworld-report-2016.pdf• Harmsen, M., Fricko, O., Hilaire, J., van Vuuren, D.P., Drouet, L., Durand-Lasserve, O., Fujimori,S., Keramidas, K., Klimont, Z., Luderer, G. and Reis, L.A. 2019. Taking some heat off the NDCs?
The limited potential of additional short-lived climate forcers’ mitigation. Climatic Change, pp.119.
• Hymel, K.M., Small, K.A. and Van Dender, K., 2010. Induced demand and rebound effects inroad transport. Transportation Research Part B: Methodological, 44(10), pp.1220-1241.
• International Transport Forum. 2018. “Towards Road Freight Decarbonisation Trends Measuresand Policies”, ITF Policy Papers, OECD Publishing, Paris.
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•

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•

•
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•

IPCC, 2014: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and
Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of theIntergovernmental Panel on Climate Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach,
M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S.
Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L.White (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and New York, NY, USA, 1132 pp.
IRENA (2019), Hydrogen: A renewable energy perspective, International Renewable Energy
Agency, Abu Dhabi
Knobloch, F., Hanssen, S.V., Lam, A., Pollitt, H., Salas, P., Chewpreecha, U., Huijbregts, M.A.
and Mercure, J.F., 2020. Net emission reductions from electric cars and heat pumps in 59 world
regions over time. Nature Sustainability, pp.1-11.
Kromer, M.A., 2007. Electric powertrains: opportunities and challenges in the US light-duty
vehicle fleet (Doctoral dissertation, Massachusetts Institute of Technology).
Lee Jr, D.B., Klein, L.A. and Camus, G. 1999. Induced traffic and induced demand.
Transportation Research Record, 1659(1), pp.68-75.
Lefevre, B., Iqbal Chaudhary, A., Yavrom, D., Srivastava, A. 2016. The trillion dollar question II:
Tracking investment needs in transport. World Resources Institute. Available from:https://wriorg.s3.amazonaws.com/s3fspublic/The_Trillion_Dollar_Question_II_Tracking_Investment_Needs_in_Transport_0.pdf
Mancini, L. and Sala, S., 2018. Social impact assessment in the mining sector: Review andcomparison of indicators frameworks. Resources Policy, 57, pp.98-111.
Nelldal, B.L. and Andersson, E., 2012. Mode shift as a measure to reduce greenhouse gas
emissions. Procedia-Social and Behavioral Sciences, 48, pp.3187-3197.
Nelson, D., Hervé-Mignucci, M., Goggins, A., Szambelan, S.J., Zuckerman, J. 2014. Moving to a
Low-Carbon Economy: The Financial Impact of the Low Carbon Transition. Climate Policy
Initiative. Available from: https://climatepolicyinitiative.org/wp-content/uploads/2014/10/Movingto-a-Low-Carbon-Economy-The-Financial-Impact-of-the-Low-Carbon-Transition.pdf
New Climate Economy. 2016. Better Growth, Better Climate.
New Climate Economy. 2016. The Sustainable Infrastructure Imperative: Financing for Better
Growth and Development.
Puig, D., Olhoff, A., Bee, S., Dickson, B. and Alverson, K. 2016. The Adaptation Finance Gap
Report. UNEP
Saha, D., Hong, S.H., Shao, A., Modi, A. and Zemlytska, I., 2018. Private participation in
infrastructure (PPI) annual report 2017 (No. 125640, pp. 1-26). The World Bank.
Sims R., R. Schaeffer, F. Creutzig, X. Cruz-Núñez, M. D’Agosto, D. Dimitriu, M.J. Figueroa
Meza, L. Fulton, S. Kobayashi, O. Lah, A. McKinnon, P. Newman, M. Ouyang, J.J. Schauer, D.
Sperling, and G. Tiwari. 2014: Transport. In: Climate Change 2014: Mitigation of Climate
Change. Contribution of Working Group III to the Fifth Assessment Report of theIntergovernmental Panel on Climate Change [Edenhofer, O., R. Pichs-Madruga, Y. Sokona, E.
Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J.
Savolainen, S. Schlömer, C. von Stechow, T. Zwickel and J.C. Minx (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and New York, NY, USA.

For further reference
General references• Climate Bonds Standard: http://www.climatebonds.net/standards/standard• IPCC: http://www.ipcc.ch• IPCC Emissions Factor Database: http://www.ipcc-nggip.iges.or.jp/EFDB/main.php• Partnership on Sustainable, Low Carbon Transport: https://slocat.net/• EU Taxonomy on Sustainable Finance Technical Annex:
https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/document
s/200309-sustainable-finance-teg-final-report-taxonomy-annexes_en.pdf• Global Fuel Economy Initiative (GFEI): https://www.globalfueleconomy.org/
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International Energy Agency (IEA) Energy Technology Perspectives:
https://www.iea.org/topics/energy-technology-perspectives

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