Public consultation comments andresponses
Basic Chemicals
Criteria

Documents Supporting this document
Information to support issuers and verifiers is available at https://www.climatebonds.net/standard/basic-chemicals as follows:
1.
2.
3.
4.

Basic Chemicals Background paper: Contains details on why the criteria were chosen
Basic Chemicals Criteria document: the complete Criteria requirements.
Climate Bonds Standard: the umbrella document laying out the common requirements that all Certified Climate Bonds
need to meet, in addition to the sector-specific Criteria (Climate Bonds Standard V3.0 | Climate Bonds Initiative).
Basic Chemicals Frequently Asked Questions

For more information on the Climate Bonds Initiative and the Climate Bond Standard & Certification Scheme, seewww.climatebonds.net/standards. For the documents listed above, see www.climatebonds.net/standard/Basic Chemicals

No.

Category

Q uestion

Feedback received

Response

1

Criteria for
new plants vsexisting plants

1. Do you consider it
necessary to set additional
criteria for new assets?
Is the distinction andcriteria proposed for new
plants appropriate?
Refer to section 4.2.1 of thecriteria document and 4.3.1of the backgrounddocument.

Additional criteria for new assets arenecessary for a pair of related reasons;a. Chemical plants are typically large
capital expenditures and require
substantial amount of time to construct(Smith, 1999).
As such, incorporating the best practices
and current technologies in its initialdesign is far more cost-effective thansubsequent retrofits to the current state oftechnology. In many cases, retrofitting canbe way too cost-prohibitive even if there issubstantial financing with a pricing benefit.
b. While Section 5.2 indicated that the
average life of plants is 30 years, the asset
life can range 25 to 50 years (dependingon the type of chemical and specifications)(Smith, 1999). In addition, the objective
here is to ensure a continual uplifting ofemission intensity/waste metrics across allplants over time. Imposing a higher
standard for new facilities is the optimal
way to accomplish this objective especially
if the plants are expected todegrade in their environmental impact asthey age.
For the capital investment relating toenergy used, there is no option to takethose using LNG as an energy source.
Energy from LNG is necessary especiallyfor higher temperature with strong
firepower or high temperature steam
supply. Boilers and burners are mostly
reliant to coal or oil due to the costcompetitiveness. It is impossible to switch
100% of them to electricity or heat fromclean energy such as geothermal, waste
heat recovery, systems, etc.

Considering the long-life
cycles of chemicals
production facilities and thepotential lock in risks we will
not certify new virgin fossilbased production facilities.
Alternative resources should
be used, including secondary
biomass, recycled material,
CO2, low-carbon hydrogen,and renewable energy.

We propose to add capital investments
relating to LNG heating/power supply
equipment with the conditions of notlocking in to LNG for the future but
having a transition pathway to switch tomethanation or green hydrogen.
For biomass as a feedstock, wood with FSC
certification and with other relevant
certification should be eligible. If the forest
are managed in sustainable way, and it isverified by a third party, thinned wood,
PKS, etc. should be included.
It is unrealistic to rely heavily on greenhydrogen. Is it possible to consider
temporarily using blue hydrogen with theSummary of Cement Criteria Public Consultation - Climate Bonds Initiative2

transition pathway to greener hydrogen?

I agree that it is necessary to set additional
criteria for new assets. Such new assets
present an opportunity to implement low
carbon technologies through the
optimization of design and construction of
the facility. New facilities do not need todeal with the retrofit of existing
infrastructure to accommodate newtechnologies, which can be costly and canlimit the effectiveness of the newtechnology.
I think excluding the use of fossil gas in
new facilities (even with CCS) is ambitious,
yet defensible. However, it is worth noting
the IEA’s NZE scenario, for example, does
include natural gas and oil products use inchemical feedstocks (with CCUS) in 2050
(International Energy Agency (2021), Net
Zero by 2050, IEA, Paris. Sections 2.4 and3.2.). There is no specification of whether
this might be in new or existing plants.

Summary of Cement Criteria Public Consultation - Climate Bonds Initiative3

2

Coal-based
production
exclusion

2. Projects using coal forenergy or feedstock
purposes are not eligible.
Please comment on thisexclusion.

Yes. Existing, carbon-emitting assets areundoubtably required for an orderlytransition, so you are right to include theseassets as eligible under your stringent
constraints. From a philosophicalperspective, we want to see CBIcertification help these assets transition tolower-carbon processes or feedstocks. This
is where we find the most additionality
with labeled issuances. However, newassets that aren’t yet at risk of being
stranded should be required to meet muchstricter constraints. The additionality inthis case is the actual construction of lowemitting facilities, not the improvements
needed for the asset’s transition. In ourview, this is the most effective way topromote an orderly transition.
To start, it is important to make a
distinction with regards to the type offinancing.
a.Use of Proceeds financing(“green”loans/bonds) require the proceeds
to be used on Eligible Green Projects as set
out in the Green Loan Principles or Green
Bond Principles. For this reason, projects
using coal for energy or feedstock would
not be eligible for this as it would not
qualify as a GreenProject.
b.Sustainability-linked financing:
Sustainability-linked financing can be used
for general corporate purposes and is
performance based by requiring
companies to achieve a set of agreed
sustainability targets.
Excluding projects for using coal for energy
or feedstock purposes
from sustainability-linked financing would
be draconian and potentially impracticalgiven the current state of technologies.

Based on the CBI actions notpledges principle, we do notconsider a transition plan
ambitious enough forindustries relying on coal. We
will keep the coal-based
production exclusion for
assets and entities as well,
given the high GHG emission
levels, low process efficiencies
and other environmental
impacts from coal-based
production.
Although there are somehybrid projects that mix coaland alternative feedstock likebiomass or recycled content,
the percentage of alternative
sources is low and can lead togreenwashing.

Our stance is, coal-based projects, whether
used for energy or for feedstock purposes,
should not be totally excluded but should
be considered eligible
only if there is a feasible transition planthat consists of a gradual shift inenergy/feedstock mix.
While alternatives to coal and gas exists,
the technology and understanding of theseprocesses have not been developed tomake it cost-effective to deploy at scale.
Case Study: Methanol IRENA’s report(IRENA, 2021) on methanol indicates thatthe production costs required to produce
methanol from coal and/or gas costs c.
USD100–250/ MT, while bio-methanol,
which is methanol using biomass as
feedstock could cost between USD455–
Summary of Cement Criteria Public Consultation - Climate Bonds Initiative4

1013/MT, and e-methanol, which ismethanol produced using renewablecarbon dioxide captured from renewablesources, could cost between USD1120–
2380/MT.
. IRENA expects the costs for bio-methanol
and e-methanol to fall substantially torange between USD355–USD884/MT, andUSD290–630/MT respectively, in 10 years’
time. Despite this, it would not be in parity
with production from fossil fuels.
Moreover, IRENA estimated that methanol
made from biomass and renewables madeup <1% of total methanol produced, withcoal making up c. 35% and gas making up
the remaining c. 65%. Consequently,
mandating a hard shift away from coalwould make the production of methanol
extremely costly and using gas as
feedstock to make up for the shortfall incoal is not a sustainable and viable option
either.
A soft transition away from coal isrequired. Corporates should seek toreduce their reliance on coal and being
exploring alternatives to coal and gasbased methanol, while waiting for
improvements in science and technology.
For similar reasons, there should be a
gradual shift away from coal as an energy
source, due to the widely known
challenges of using renewable energy: 1)
there is not enough renewable energy
being produced, and 2) the intermittent
nature of renewable energy.
Should coal as an energy source be
excluded and renewables not able to meetthe demand, this would serve to drasticallyincrease the production costs of methanol
and reduce the production of chemicals.
This would eventually result in shortages ofmethanol.
The second challenge relates to theintermittency of renewable energy, would
mean that great volatility in the operationsof methanol production plants. This is not
feasible for the current operating model ofchemical plants.
Our experience with chemical clients
reveals that these plants operate close to
7000-8000 hours annually. This translates
to 19-22 hours daily. Intermittency would
adversely impact the economic viability of
the industry. These bottlenecks will belikely solved technologies aroundrenewable energy gradually improve,
particularly around low increasing
efficiencies, smart grid, ora redesign of the underlying processes in
the plant.
Summary of Cement Criteria Public Consultation - Climate Bonds Initiative5

Hence, projects using coal for energy
should not be wholly excluded but should
be considered eligible only if it is being
used as a transition tool in the meantime.

I do believe it is not necessary to use coalfor energy but it is necessary to use otherless carbon intensive fossil fuel such as
LNG until the less carbon intensive
technology will come to realize, such ashydrogen.
For those who currently heavily rely oncoal fire, it is another option for them toswitch coal to biomass. If the asset areplanned to switch from 100% coal fireto 100% biomass in the future, this should
also be included as one of the transitionary
green.
We think LNG is especially necessary formaking own electricity power supply, as
well as heat supply. Especially for heat andsteam supply, it is impossible
to rely 100% on electricity. Consequently,
they temporarily need to rely on LNG for
supplying high temperature heating andsteam for the process ofchemical production.

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3

Fossil gas +CCUS eligibility

3. Is the use of fossil gas
with CCS as a feedstock or
fuel an acceptablemeasure?
See section 4.2.3 in the
Criteria document

We think that the measure is acceptable as
it aligns with the Net Zero Emissions by
2050 NZE (IEA, 2021). NZE by 2050
requires declines in both coal usage andthe process energy intensity in chemical
production•Coal-based chemical industry poses ahuge threat as emissions intensity arehigher than natural gas-based production,accounting for 28% of process energy usedin chemical production• NZE by 2050 Trajectory requires share ofcoal to fall to 20% by 2030. And in the NZE
by 2050 Scenario, the average processenergy intensity of primary chemical
production should decline 12% from thecurrent level by 2030 Coal-based
processing should be replaced byfundamentally more efficient methods
such as natural gas-based processing. Coal
produces 95.74 kg CO2 per million Btu,
while natural gas produces 52.91 kg CO2
per million Btu, emitting almost 50% less
CO2 than coal. Usage of CCS alongsidewith fossil gas is feasible.
•CCUS can contribute 38% of theemissions reductions needed in thechemical subsector, making it critical.
•Despite limited CCUS globally,
momentum for CCUS is growing rapidly
across regions, with countries adopting of
economy-wide decarbonisation targets for
2050.
•Estimated costs for carbon capture incoal-fired power plants cost $20-132 per
ton and $49-150 per ton for natural gas
power plants. Despite so, natural gas with
CCUS is still the preferred option.
•Comparing total 100-year CO2e emissions
between natural gas and coal with CCS/U,
natural gas CCS/U produces 230-481 gCO2e/kWh while coal CCS/U produces
282-1011 g-CO2e/kWh.
Yes, it surely is at this moment until the
innovative technology such as using
ammonia and/or hydrogen for heating andsteam supply.
Instead, we need to ask for issuers to makesure that they have clear roadmap whichmakes the power plant not locked in to thefossil fuel including LNG but plans toswitch the feedstock from LNG to othercleaner no fossil fuel feedstock, such ashydrogen,ammonia in the future.
Please be mind that CCS is not currently
technically and geographically possible
globally. I propose to add the conditions
use of fossil gas needs the clear plan not toSummary of Cement Criteria Public Consultation - Climate Bonds Initiative

Although we are aware of
regional differences, weshould not certify fossil-based
assets without CCS or CCU.
In regions where storage is
not technically feasible or
there is not infrastructure
available, CCU can be
implemented. Fuel andfeedstock substitution are
also an option for fossil-based
processes where CCS is not
feasible.

7

lock-in on fossil gas in the future, insteadof the conditions to add CCS.

4

Biomass fromprimarysources
exclusion

4. Eligibility for biomass as
an energy source isrestricted to secondaryorganic streams, (i.e.
materials usually discardedor classified as wastes fromanother primary use, e.g.
residues from agriculture,organic matter from
agroindustrial processing).
Primary biomass such as
wood and dedicated crops
are eligible only forfeedstock purposes if theymeet specific sustainablesourcing criteria
requirements. Pleasecomment on this restriction
and refer to section 3.3 inthe background document
and section 4.3.3 in thecriteria document.

The restriction in the use of biomass isnecessary. The immediate benefit of thisrestriction is reducing the depletion of
resources, especially where trees arecultivated solely to be used as an energy
source, as well as promote a more circular
economy.
While there is not much literature
specifically for methanol when consideringbiomass as an energy source, the aim is to
reduce leakage and improve circularity.
Restricting biomass to secondary organic
streams ensures that waste would be
repurposed, reducing the net waste.
The restriction of biomass to primaryorganic only if they meet sustainablesourcing is also necessary. IRENA’s
renewable methanol report (IRENA, 2021)
provides a detailed perspective into thedifferent types of biomasses (that adhere
to the restriction), ranging from farmed
wood to waste wood, black liquor, andmunicipal solid waste, and shows that
there are well-established case studies forcorporates and projects to reference whendeveloping and operating a project,suggesting that the science is ready/almost
ready to be applied on a large scale. Over
all, the restrictions for biomass are fair,
and would help to promote circularity,
reduce leakages and absolute waste.
We believe it necessary to keep
consistency of the eligibility of biomass in
multiple sectors. As such, we agree to refer
the current proposed criteria
requirements. However, we may consider
the possibility of transitioning phase forusing thinned wood, certified PKS, etc
Robust safeguards around bioenergy andbio-feedstocks are a good idea. There is
still much uncertainty around GHG
accounting and emissions allocations forbio-based feedstocks.

Summary of Cement Criteria Public Consultation - Climate Bonds Initiative

No action needed. Climate
Bonds will keep the restriction
to use only secondary
sources.

8

5Recycled
feedstockcontent
percentage(30%)

5. For recycled feedstock
content, what might be an
appropriate threshold thatis suitably ambitious yet
realistic for best-practicemeasures in the sector?
For example, would 30% be
a suitable threshold?
See section 3 (table 1) in
the Criteria document

Increasing the recycled content infeedstock accomplishes two major
objectives; (1) reducing the cradle to gate
emissions and (2) improving the circularity
of processes. For this reason, increasing its
content over time is a very sensible
approach. However, at this point, the 30%
threshold might not be suitable forwidespread adoption as it may be too highdepending on the country’s situation.
Through the Background document, it ismentioned repeatedly that feedstock
availability differs by location and the samecan be said for recycled feedstock.
Different geographic regions have different
recycling realities and regulations withvarying thresholds•California’s legislature passed a bill in2020 which requires 50% post-consumer
recycled content in plastic bottles by 2030.
•U.K.: Any plastic bottle sold from April
2022 that does not contain at least 30%
recycled plastic will be charged 200
pounds per metric ton.
•In the E.U., PET bottles must contain 25%
recycled content by 2025, and 30%
recycled content in all bottles by 2030.
•South and Southeast Asian countries
which rely heavily on imports are following
E.U., with Indonesia planning to scale its
recycling capacity and India announcingthat industrial packaging produced in thestate must include at least 20% recycledmaterial.

We will modify the minimum
content of recycled material
to promote more recycling
processes:
20% in regions without local
regulations for recycling orwith lower percentages.
>20% in regions with local
regulations. If it has a higher
percentage, it should prevail.

The availability of recycling infrastructure
varies globally thus affecting theavailability of recycled feedstock•China imposed strict import restrictions
on certain plastics and minimum levels ofcontamination for imported materials,
hinders the use of recycled materials in the
country.
•Countries that rely heavily on recycledmaterials imports such as Malaysia,
Thailand, Vietnam, India and Turkey facehigher trade inflows after the ban,
triggering concerns given their poorly
developed plastics recycling facilities andrelatively weak environmental andtreatment standards.
Recycled feedstock use depends on theavailability of recycled plastic of known
and appropriate quality.
•Lack of information on the chemicals in
the plastics, such as where the feedstock’s
source materials are sourced from, what
type of additives it contains, the recycled
feedstock’s composition, etc.
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9

•Previously used plastics may include that
contain potential substances that could
contaminate human or environmental
health.
Reaching 30% recycled content globallywill be a challenge for most companies andcountries. Insistingon this threshold may also be harmful forhumans and environment depending on
how much content are contaminated in
the feedstock. It would be practical tolower the threshold to 15%-20% which
would satisfy
most regions across the world and making
it safer for consumption. To ensure
ambitiousness, we would
also push to increase the threshold every
3-5 years to be in line with the higher
production standards

I do not think it realistic for all the chemical
sectors around the world. It is important tohear the possible number from theindustries around the world with thescience based rationale.
In addition, this is not a fair baseline for all
issuers, since some of the chemicalcompany has already implemented radical
energy reduction efforts already and thereis few room to improve the energy
efficiency. But for those who have notintroduce high efficient production
equipment yet, can achieve more than
30% energy efficiency, even if they replaceand introduce the same equipment

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6

Scope 3
qualitative
strategies

6. Are the qualitative
strategies proposed toaddress scope 3 emissions
appropriate for the basic
chemicals chemical sector?
Please refer to section 4.2.4
in the criteria document.

Scope 3 includes all other indirectemissions that occur in a company’s value
chain. This would include transportation,
distribution (upstream and downstream),leased assets, investments, procured
goods and services. Measuring this would
be the biggest challenge for the chemical
sector due to the number of stakeholders
and stages in the value chain.
Once metrics have been established, thequalitative strategies to address Scope 3
emissions would include different steps totackle each component in turn. We would
also scrutinise the strategy to address
emissions related to purchased goods andservices over the term of the bond.
Examples includes;•Evidence for low-carbon procurement
policies; or•Partnerships with suppliers with GHG
emissionsreduction targets that can bemeasured; or•Switching from fossil-based raw materials
to alternative feedstocks such as biobased
and recycled materials.
•For alternative feedstocks, results from alife cycle GHG assessment with a cradle-tosite boundary needs to be used to quantify
scope 3 upstream emissions.
Regarding the scope 3, it seems to be toostrong to express “issuers must” in thissection, since scope 3 emissions areindirect emissions and there arelimitations in its controlling power.
What about changing the wording from“must” to “recommend” to prepare lowcarbon procurement policies, partnerships
with suppliers, etc.
These strategies are aligned with SBTialternatives to address Scope 3 emissions
for chemical companies
It makes sense to include additional
criteria for upstream scope 3 emissions. I
do worry, though, about the effectivenessof including “Partnerships with supplierswith GHG emissions reduction targets thatcan be measured.” As we know very well,it’s difficult to assess the credibility of GHG
emissions reduction targets, so asking
chemicals companies to do this analysis isa difficult ask. I understand this is worded
as having “reduction targets that can bemeasured,” so it’s not necessarily asking
for credible plans (just measurable ones),but I worry that issuers might not actually
be able to reduce scope 3 emissions
through this option. It will all depend on
the credibility of the supplier’s GHG
emissions targets, which issuers 1) are
unlikely to be able to effectively assess andSummary of Cement Criteria Public Consultation - Climate Bonds Initiative

Although these measures do
not include accounting ofemissions, it aims to address
them to some extent, being
aware of the challenges ofscope 3 emissions accounting.
We should keep thesequalitative alternatives andupdate the criteria with aquantitative strategy to set
scope 3 emissions reduction
targets once it is available.

112) have very little operational control over.
The other two alternatives feel much more
likely to have a real impact on scope 3
emissions.

7

Scope 2
qualitative
strategies

7. Are renewable-based
captive power generation,and renewable-based
power purchase agreement
appropriate to address
scope two emissions ofbasic chemicals?

In a nutshell, yes. The Scope 2 Emissions of
the chemicals sector are attributed to theindirect emissions from the generation ofelectricity and heat.
Using renewable-based power generation(captive or PPA) would be the starting
point to addressing the Scope 2 emissions
but not without an understanding of thenuances of renewable energy. Emissionsfree technologies such as solar, wind,hydropower, geothermal and greenhydrogen would be most ideal. Other
renewable sources such as biofuels andbiomass would still produce emissions(EIA,2021).

No actions required. Whenbenchmarks do not address
scope 2 emissions, theserequirements will be part ofthe criteria.

Our experience with financing power
generation assets indicates that this is a far
more complex endeavour as there would
need to be a substantive amount offeasibility work to understand theavailability of energy sources but also theload requirements of the facility. As such,in the interest of being concise, our standis that a transition to renewable energy
would reduce Scope 2 Emissions but
optimising this against cost and reliability
would require more careful calibration.
However, renewable energy alone would
not be sufficient without the electrificationof processes especially with regards to the
production of heat in the chemical
processes. Heat is an importantcomponent in breaking up the compounds
to produce the required end-products.
Electrification of these processes (insteadof fossil fuel combustion) coupled withrenewable-based generation would be thecomprehensive response to addressing
Scope 2 Emissions adequately (Deloitte,2020).
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8

SBTi crosssectoralpathway to
reduceemissionsovertime

8 – Is the SBTi crosssectoral pathway the best
to reference to decrease
emissions over time? If not,what else should beconsidered for the chemical
sector?
Refer to section 4.1 in the
Criteria document, andsection 4.2.2 in the
Background document.

Apart from the SBTi cross-sectoral
pathway, we also look to the Transition
Pathway Initiative (TPI). TPI is a global
initiative led by asset owners andsupported by asset managers. Aimed atinvestors and free to use, it assesses
companies’ preparedness for the transition
to a low-carbon economy, supporting
efforts to address climate change. It uses
publicly available data and an academicallyrigorous approach. Whereas the SBTi canbe used by companies across the whole
economy, the TPI focuses on assessing
those sectors that contribute mostsignificantly to greenhouse gas emissions,and currently provides assessments forabout 300 publicly listed companies across
14 high carbon sectors.
They combined Resource Efficiency (RE)data with the targets’ data set from the
SBTi and the assessment results from the
TPI, to see if there was evidence
suggesting that resource efficiency
companies were more likely to be signed
up to one of these initiatives and how they
were progressing.

A new decarbonisation
pathway developed recently
for the chemical industry by
UTS will be adopted.
It could be difficult for a
facility or asset to reduce
emissions overtime following
a decarbonisation trajectory
continuously.
Assets: The carbon intensity
benchmark must be alignedwith the pathway. And both,the threshold and pathway
must be reviewed andupdated every three years.
Entities: Entities must reduce
emissions overtime alignedwith the pathway.

They key difference between SBTi and TPI
is that SBTi has an end target with noshort-term target while TPI provides shortterm thresholds to benchmark over time.
TPI and SBTi should go hand in hand ascompanies in these sectors need to haveshort term goals before achieving longterm goals.
Analysing the TPI results, it’s important tonote that less than 10% of companies in
the MSCI World have been assessed by the
TPI. Of the companies assessed, about 37%
are considered to be either compliant with
the National Determined Contributions(NDCs) set by national governments in the
run-up to Paris, or with a (below) 2 degree
world (limiting global warming to below 2
degrees above pre-industrial levels).
When only looking at RE positive stocks,
this figure rises to 54%, an increase mostvisible in the “below 2 degree” category.
One in four
assessed RE positive stocks fall within thismost stringent category, versus only one ineight across the whole benchmark and lessthan one in twelve within the RE negative
stocks.
I do not think SBTi cross-sectoral pathway
fits to chemical sector. Like Japan, it isrealistic to refer each country’s roadmap
for each industry, considering each uniquegeographical energy mix back ground, etc.
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9

10

The shape of a gently declining curve, likethe SBTi cross-sectoral pathway, is not
appropriate for these criteria. Normally,
one new investment shows us certain
reduction one time but the further
reduction is not expected in a short period.
Thus, the shape of the proposed curve
would not match with real individual
investments.
SBTi’s cross-sectoral pathway is areasonable reference for this purpose.
Another reference may be IEA’s NZE
scenario, which includes projected
emissions from the chemicals sector(although emissions are not broken out by
product type), and/or IEA’s Ammonia
Technology Roadmap (for ammonia
production).
Meeting the9. Products need to meet
Between the 2 options, we are morecarbonspecific carbon or energy
inclined towards option a). A continued
intensity
intensity thresholds overcompliance approach culminating in a final
thresholds
the term of the bond.
target is more consistent with the strategy
These thresholds areof TPI (Question 8) of establishing regular
captured in Table 2. Two
thresholds and verification that leads up to
options are proposed.
a net zero target in 2050 (SBTi). Having
Please provide input on
continued compliance ensures that at thewhich of these options is
end of the facility, the company should be
more appropriate,in adherence and closer to its net zeroparticularly from atarget.
standpoint of being able to A side benefit of this approach is also
verify that an issuer
providing the issuer with multiple
continuously meets themilestones to achieve the certification andthresholds, or level ofaligns itself more towards sustainability
ambition. Please refer tolinked financing instrument timeframe if
section 4.1 of the criteria
financing is needed for the transition to
document.
cleaner processes/business.
I would recommend Option A to ensure
continuous improvement.
Option B, in which the plant must fallunder the threshold at the halfway point of
the bond only, may not capture the plant’strue emissions trajectory
Adaptation and Do you agree with the
We agree with the assumptions behind the
Resiliene
assumptions that underpin A&R criteria. Ensuring that theCriteria
the adaptation andproject/asset is resilient to climate change
resilience requirements? Is through appropriate climate risk
there anything else thatassessment and reduction is a sensible
needs to be considered?
approach.
Consider the additional
For chemicals-specific factors, we agree
requirements for Chemical with the (1)identification and treatment ofHazard Assessment andhazardous substances and (2)other assessments required improving the reporting and disclosures ofin the checklist – are there risks.
any other significant
We noted a few issues that were notenvironmental risks that
addressed in the A&R Checklist:
the checklist does not
There are 4 areas that were supposed toalready cover?
be covered;
Refer to section 4.3 andSummary of Cement Criteria Public Consultation - Climate Bonds Initiative

It was decided to leave thetwo options for applicants tochoose from.

Threats to supply chain, andlabour productivity/safety ,including the potential
migration of the workforce
are out of the scope of
Climate Bonds Resilience
Principles. Thus, supply chain
and logistic will not becovered by the check-list.

An accident management
plan will be included as arequirement.

14

Appendix 2 in the Criteria
Capital assets, production, logistics &document and sections 5 in supply and labour. Of which, logistics andthe Background Paper.
labour were not covered in the checklist. In
addition, the list of resources provided on
page 36 did not cover those areas.
2. In our project financing activities, we
also necessitate the need for an accident
management plan. Given the hazardous
nature of the chemicals, it is important toensure that there is a appropriate
response plan to ensure thatenvironmental impact of accidents (onsite/off-site) can be managed promptly
and effectively.
Other

The criteria for producing the Chlorine
shown in Table 2 in the section 4.1areapparently far more strict than those forother products, and the logic behind themis unintelligible.
I think the criteria and background are very
well presented and represent an ambitious
set of benchmarks for the industry.
Electrification of processes makes sense as
an eligible capital investment, but only if
the increase in electricity consumption isassociated with renewable energy use.
The use of coal and fossil gas are
considered in the criteria for both energy
and feedstock use. Was the use of oil
products, such as naphtha, as feedstocks
also considered? Oil products are
significant sources of feedstocks as well.

Chlorine production relies onelectricity, thus ensuring a
low-carbon electricity will be
key to certify a Chlorine
production asset as a lowcarbon one.

These criteria aim to promote
the use of lighter feedstock.

Waste management andwater use are part of otherenvironmental impacts. By
requesting a thoroughenvironmental impact
assessment, these aspects
should be covered.

Overall, I believe the criteria fulfill lowcarbon aspirations for the Basic Chemicals
sector. This is a thorough and wellreasoned approach.
Some chemical products are used to
produce materials to decarbonise othersectors. For example EV cells, and certain
polymers to manufacture wind turbines.
Did you think about including theseproducts in the chemicals criteria?
Setting criteria that promote recyclability
and durability of end products could havea positive impact.
Waste management should be included in
the criteria.
Water use criteria and targets should beconsidered, specially for regions withwater stress issues.
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Summary of Cement Criteria Public Consultation - Climate Bonds Initiative16

Summary
Question Topic

Feedback Received

1

Criteria for new plants vs existing plants

Agreement on the necessity of having different criteria for new and existing
assets; however, new production facilities should allow the use of fossil
resources with CCUS until 2030 or 2040 (which is aligned with the IEA NZE by
2050) as part of the transition.

2

Coal-based production exclusion

3

Fossil gas + CCUS eligibility

4

Biomass from primary sources exclusion

Response

Considering the long-life cycles of chemicals
production facilities and the potential lock in risks
we will not certify new virgin fossil-based
production facilities. Alternative resources should
be used, including secondary biomass, recycledmaterial, CO2, low-carbon hydrogen, andrenewable energy.
Participants supported this exclusion for production facilities or assets, but they Based on the CBI actions not pledges principle, wesuggested it should be different for entities/companies certification.
do not consider a transition plan ambitious enoughCoal-based projects, whether used for energy or for feedstock purposes,
for industries relying on coal. We will keep the coalshould not be totally excluded but should be considered eligible only if there is based production exclusion for assets and entities
a feasible transition plan that consists of a gradual shift in energy/feedstock
as well, given the high GHG emission levels, low
mix.
process efficiencies and other environmental
While alternatives to coal and gas exist, the technology and understanding of
impacts from coal-based production.
these processes have not been developed to make it cost-effective to deploy at Although there are some hybrid projects that mix
scale.
coal and alternative feedstock like biomass or
recycled content, the percentage of alternative
sources is low and can lead to greenwashing.
What to do in regions without CCUS infrastructure and availability? CCUS is not Although the TWG is aware of regional differences,
technically available everywhere. Should we include a fossil fuels transition
Climate Bonds should not certify fossil-based assets
plan where CCUS is not avaiable? (Regional differences)
without CCS or CCU.

Participants supported this exclusion

In regions where storage is not technically feasibleor there is not infrastructure available, CCU can be
implemented. Fuel and feedstock substitution are
also an option for fossil-based processes where CCS
is not feasible.
No action needed. The restriction will be part of thecriteria.

5

Recycled feedstock content percentage(30%)

Regional differences should be considered, including local recycling regulations
and infrastructure. It was suggested to set a range of recycled content between
15-30% depending on local context.

We can modify the minimum content of recycledmaterial to promote more recycling processes:
20% in regions without local regulations forrecycling or with lower percentages.
>20% in regions with local regulations. If it has ahigher percentage, it should prevail.

6

Scope 3 qualitative strategies

Participants supported these strategies. However they suggested to evaluate
their real impact on emissions reduction.

7

Scope 2 qualitative strategies

Participants supported these strategies.

Although these measures do not include
accounting of emissions, it aims to address them tosome extent, being aware of the challenges ofscope 3 emissions accounting. We should keepthese qualitative alternatives and update thecriteria with a quantitative strategy to set scope 3
emissions reduction targets once it is available.
No action needed. We will keep these restrictions
to address scope 2 emissions.

8

SBTi cross sectoral pathway to reduce
emissions overtime

The SBTi cross-sectoral pathway does not fit to chemical sector
The shape of a gently declining curve, like the SBTi cross-sectoral pathway, is
not appropriate for these criteria. Normally, one new investment shows us
certain reduction one time but the further reduction is not expected in a shortperiod. Thus, the shape of the proposed curve would not match with realindividual investments.

A new decarbonisation pathway developed
recently for the chemical industry by UTS will be
adopted.
It could be difficult for a facility or asset to reduce
emissions overtime following a decarbonisation
trajectory. So we could include the pathway
requirement only for entities, and for assets only
the carbon intensity benchmark, clarifying that it
will be revised and updated periodically to ensure
ambitious targets.
Assets: The carbon intensity benchmark must bealigned with the pathway. And both, the thresholdand pathway must be reviewed and updated every
three years.
Entities: Entities must reduce emissions overtimealigned with the pathway.

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9Adaptation and resilience criteria

Pending to include labour and logistics aspects in the check list.
It is recommended including an accident management plan.

Threats to labour productivity/safety assessment,
including the potential migration of the workforce,and supply chain and logistics vulnerabilities will be
removed from the A&R check-list, given that it isout of the CBI A&R principles scope..

An accident management plan will be included as arequirement.

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