The Climate Bonds Initiative has released a draft standard for Low Carbon Transport bonds for public comment. The standard aims to help scale up investment in transport infrastructure and initiatives compatible with a 2°C global warming limit.

The International Energy Agency has estimated around US$450 billion a year in investment will be required to achieve an appropriate level of decarbonisation of both passenger and freight transport.

The CBI’s proposed criteria for a low carbon transport infrastructure bond uses universal greenhouse gas emission thresholds defined on a per passenger per kilometre basis for moving people, or a per tonne per kilometre basis for shifting freight. The types of projects that are likely to be eligible under the criteria include:

  • freight and passenger rail; infrastructure, infrastructure upgrades and rolling stock (exception: freight corridors built primarily to transport fossil fuels)
  • electric, hydrogen or hybrid vehicle projects
  • cycling and bicycle infrastructure
  • high-quality bus rapid transit systems
  • technologies that allow new low carbon behaviour, such as car clubs or bike sharing
  • integrated multi-modal transport systems and networks

Technical working group member Heather Allen, from the Transport Research Laboratory, said transport demand was set to double by 2050.

“Led by growth in Asia, in particular China and India, road and rail freight volumes alone are expected to increase by 230 per cent and 420 per cent, respectively,” she said.

“It is crucial that low carbon transport, rather than fossil fuel based transport, is prioritised while recognising the special nature of the transport sector and the complexity of players across modes and functions.

“Green bonds can play a huge role in financing this growth – which is why it is really important to ensure that there are standard approaches for issuing green bonds for low carbon transport.”

The full discussion paper and details of how to submit comments can be found here.

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