Sunday, July 25, 2021
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Certification for hydropower is now formally available for issuers of green debt products across all markets

The Climate Bonds Standard Board (CBSB) has approved the Hydropower Criteria under the International Climate Bonds Standard (CBS), providing screening criteria for investments in sustainable hydropower projects.

Certification for hydropower is now formally available for issuers of green debt products across all markets. The Hydropower Criteria encompasses the broad components of climate mitigation and climate adaptation and resilience. Under the new Hydropower Criteria, the issuer must demonstrate to have a high-power density or a low emissions intensity and undertake an official assessment using the ESG Gap Analysis Tool (HESG), one of the Hydropower Sustainability Tools.

“The urgency of the climate crisis calls for the accelerated adoption of renewable and sustainable energy sources,” said Sean Kidney, CEO of the Climate Bonds Initiative, a not-for-profit organisation responsible for climate bond standards and certification. “Sustainable hydropower is part of the suite of clean energy options to replace coal, oil and gas generation and help meet future demand for low carbon energy. Certification under the Climate Bond Standard will now provide a best practice guide for investors as to the environmental features of potential hydro investments.”

A number of issuers have already issued green bonds to finance or refinance hydropower projects. Considering the potential negative impacts of the specific assets and projects linked to those green bonds, the Climate Bonds Standard Board found it necessary to ensure consistent and credible guidance is available to investors who wish to channel funds into green bonds linked to hydropower. The Criteria determine a robust and transparent screening to ensure that investments are climate compatible, therefore being sufficiently low carbon and enabling greater climate adaptation and resilience in a world of unavoidable climate change, in line with the goals of the Paris Agreement and do not cause significant harm in respect of a number of wider environmental or social issues. 

According to the International Hydropower Association (IHA), the Climate Bonds Standard criteria for hydropower paves the way for a new era for green investment in renewable energy and will help accelerate global decarbonisation efforts.

“The world needs urgent investment in renewables to avert catastrophic climate change,” said Eddie Rich, Chief Executive for IHA. “Until now, however, the lack of specific hydropower climate bond criteria has meant that most issuers have either excluded hydropower or limited investments to small-scale projects. The CBI’s new Climate Bonds Standard criteria clears the way for significant additional investment in sustainable hydropower. It provides the clarity and assurance that investors, governments, the industry, as well as local communities, have demanded for years.”

“Let there be no mistake, these are tough criteria to meet for any energy industry,” he continued. “Whilst the hydropower sector can be proud of being held to the most rigorous sustainability investment criteria for any renewable, we will continue to strive for a level playing field to ensure that good green projects don’t get left behind. Nonetheless, this marks the beginning of a new era for investment in sustainable hydropower.”

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