ELECTRICAL ULTILITIES CRITERIAClimate Bonds Standard

Why Electrical Utilities Criteria are necessary
Electricity generation is a major source of carbonemissions, responsible today for 40% of the global
total. Decarbonisation of the power sector is not only
essential to reduce GHG emissions but also a key factor
in decarbonising the whole energy sector that accounts
for more than 70% of GHG global emissions.

End-use green electrification in buildings, transport, and industry willtransition the economy to achieve the Paris Agreement goal of limiting
global temperatures to 1.5 degrees above preindustrial levels.

Criteria Scope
The Electricity value chain includes generation, distribution andtransmission, market, and end use. Producing low-carbon electricity
will decarbonise the generation segment and enable the decarbonisationof the end-use sector via electrification. Additionally, transmission
and distribution need to be updated and integrated to connect green
generation (sometimes intermittent) with consumption (expected to beincreased with electrification of the energy system).

Power Generation

Electrical Utilities Criteria cover generation including all emissions
from the generation process and those related to the electricity
purchased from the grid for distribution or trading in the market.
Grids and Storage Criteria extend to transmission and distribution,and Energy Sector Criteria (Steel, Buildings, Low-Carbon Transport,
Hydrogen, etc.,) apply to end use.

Transmission andDistribution Network

MarketWhat can be Certified
The following can be Certified under these Criteria following
the update of the overarching Climate Bonds Standard:• Entities (electrical utilities) and sustainability-linked
debt (SLD) issued by those entities under Section 3of the Criteria;• Use-of-Proceeds (UoP) bonds financing mitigation measures(e.g., carbon capture and storage (CCS), carbon capture utilisation andstorage (CCUS), and co-firing) under Section 4 of the Criteria.

Electrical Utilities Criteria Climate Bonds Initiative

The Climate Bonds Standard
provides any cross-sectoral
requirements for UoP, SLD, asset
or entity Certification which must
be met in addition to the electricalutilities-specific requirements
described in this document.

End use

CLIMATE BO
STANDARD NDS

Globally recognis
Certification of ed, Paris-alignedDeEntities and As bt Instruments,setscience-based s using robust,
methodologies
Upd

ated Februar y2024
Version 4.11

Entities Certification
Mitigation Criteria• Step 1. Meeting an electricity transition pathway(Section 3.1.1 of the Criteria).

Mitigation Criteria cover all the emissions related
to the electricity produced, traded or distributedin three steps:• Step 2. Technologies Criteria for non-combustion but relevant
emissions (Section 3.1.2 and 3.1.3 of the Criteria).
• Step 3. Cross-cutting criteria to cover life cycle CO2 and CH4 emissions
related to electricity generation and the environmental impacts associatedto the use of bioenergy in power plants (Section 5 of the Criteria).

Summary of the Criteria
At the time of Certification, does the entity’s generated and purchased electricity
emissions intensity, to which the future entity and SLD performance targets arelinked, align with the transition pathway of the sector-specific Criteria? Section 3.1.1.
from now through to 2050?

by 30 December 2030 and willcontinue to after that date?

AlignedNoTransition

Yes

NoYes

Does the entity’s portfolio meet the sector-specific Criteria for any plant operating atthe time of Certification (existing capacity)? Section 3.1.2.

Yes

No

Does the entity’s portfolio meet the sector-specific Criteria for any plant operating
after the time of the certification (new capacity)? Section 3.1.3.

Yes
When applicable, does the entity’s portfolio meet the cross-cutting criteria for:

No

CO2

H2

CH4

CCS/CCUS?

Hydrogenbased fuels
for cofiring?

Bioenergy
for cofiring?

Section 5.1.

Section 5.2.

Section 5.3.

Not applicable

Methaneleakages
in fossil
gas plants?
Section 5.4.

Yes

Does the entity meet the Adaptation and Resilience Criteria in Section 6?

Not Eligible for
Certification

Electrical Utilities Criteria Climate Bonds Initiative

Eligible for
Certification

2

STEP 1. Meeting the pathway
Emissions reduction pathway

gCO2/kWh

400

Transition pathway of the sector-specific Criteria

200

Year

2025

2030

2035

2040

2045

2050

Emissions intensity(gCO2/kWh)

460

186

48

3000
2025

2030

2035

2040

2045

2050

STEP 2. Technologies Criteria. Fossil fuel capacity.

STEP 2. Low-carbon capacity.

Mitigation Criteria for fossil fuel existing capacity

LCA emission intensity threshold (gCO2/kWh)

Coal

Advanced
economies

Emerging
economies

Phasing-out
unabated plants

2030

2040

IF NOT:

2035

Generationtechnology

Existingplants

New plants

Otherenvironmental
impacts

Solar and Wind

Automaticallyeligible

Automaticallyeligible

N/A

Hydropower

100 gCO2e/kWh

50 gCO2e/kWh

Meet Criteria

Geothermal

100 gCO2e/kWh

50 gCO2e/kWh

Meet Criteria

Bioenergy

100 gCO2e/kWh

50 gCO2e/kWh

Meet Criteria

2040

Co-firing with
100% low-carbon fuels
CCS retrofit with a carbon
capture rate of 90%
Fossil Gas.
CrossCutting

Phasing-out unabatedplants

2040

2040

IF NOT:

20402040

Co-firing with
100% low-carbon fuels
CCS retrofit with a carbon
capture rate of 90%
Oil

Phasing-out
unabated plants

2030

2040

No new fossil generation capacity

STEP 3. Cross-Cutting Criteria.

Adapatation and Resilience Criteria.

To cover other life cycle GHG emissions related to theelectricity generation and environmental impacts associatedto the use of bioenergy, the Electrical Utilities Criteria requirecross-cutting criteria for:

The entity is required to complete a risk assessment they
have undergone or will undergo including the identified,planned, and implemented measures to manage andmitigate the climate risks, without harming the resilience ofthe surroundings. It should:• CO2 leakages in CCS/U systems. CO2 emissions thresholds in transportand storage of CO2 captured and criteria for CO2 utilization when used in
products instead of stored.

• Understand and identify the context:
Boundaries and interdependencies.

• Low-carbon fuels. Emissions intensity thresholds for hydrogen/hydrogen derived fuel used for cofiring in fossil fuel power plants
covering the emission embedded in processing and transportation.

• Address climate risks: Identify climate risks and address them byundertaking risk-measures and adopting management plans ensuringthat the entity is robust and fit-for-purpose in the face of uncertainty.

• Bioenergy. Criteria for the use of biomass in electricity generation:
This criteria provide 1) emissions threshold for processing andtransportation of biomass. 2) environmental impacts related to thebiomass sources allowed, use of biomass indirect land use, foodsecurity and adaptation.

• Address resilience benefits: Deliver resilience benefits
over and above identified risks.

• Methane emissions. Requirements for detection and reparation of
methane leakages in fossil gas power plants.
Electrical Utilities Criteria Climate Bonds Initiative• Undertake regular (re)evaluation of climate resilience performance,adjusting for risk reduction measures over time as needed.
Hydropower, geothermal, and bioenergy assets must undergo specificassessment to tackle their potential environmental impacts.

3

UoP CERTIFICATIONElectrical Utilities Criteria also include Certification
for UoP bonds to finance decarbonisation
measures in fossil fuel power plants.

Carbon captureand storageor utilisation

Two measures are eligible when meeting
the Criteria:

Required:
90% of carbon
capture rate• CCS/U in

CO2

Cofiring withlow-carbon fuels
Required:
Cofiring rateof 100%.

H2• Cofiring with low-carbon fuels.
Cross-cutting forThresholds

Alignment% leakages for massof CO2 transported

5%EU
Taxonomy

Hydrogen production anddelivery emission intensity

From 3 kgCO2e/kg H2
in 2023 to0 kgCO2e/kg H2 in 2050

CBI

Biomass production,transport and distribution
emission intensity

5.5 gCO2/MJ
biomass produced
and transported

CBI

Further information sources: Want to Certify, or just know more?
Take a look at these documents:
Electrical utility Criteria Document:
Summary of the Criteria for issuers and verifiers
https://www.climatebonds.net/standard/electricity-utilities
Electrical utility Criteria Background Document:
Technical Background and summary of Criteria development process
https://www.climatebonds.net/standard/electricity-utilities

Climate Bonds Standard: CBI’s Certification process,Pre- and post-issuance requirements and a suite of
sector eligibility and guidance documents
https://www.climatebonds.net/standard/the-standard
For certification go to https://www.climatebonds.net/certification

Climate Bonds Initiative
Ana Díaz, Energy Transition Lead
Paco Moreno, Energy Analyst
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation
or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites. The ClimateBonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any
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Initiative public communication.
© Climate Bonds Initiative 2024

Electrical Utilities Criteria Climate Bonds Initiative4