Hydrogen Production Criteria

Standard

The Climate Bonds Standard and Certification Scheme is a labelling scheme for bonds and loans. Rigorous scientific criteria ensure that bonds and loans with Certification, are consistent with the 2 degrees Celsius warming limit in the Paris Agreement. The Scheme is used globally by bond issuers, governments, investors and the financial markets to prioritise investments which genuinely contribute to addressing climate change.

Resources:

Timeline of Development:

May 2022: TWG Launch

8 Sept- 28 Oct 2022: Public Consultation

Nov 2022: Criteria Available for Certification

Status: The Hydrogen Criteria are now available for Climate Bonds Certification.

Criteria: The Hydrogen Criteria lay out the requirements for Hydrogen production projects to be eligible for inclusion in a Certified Climate Bond and for companies on a credible transition path to issue transition labelled debt.

Bonds and loans linked to these eligible assets and projects will be aligned with the Paris Agreement 1.5ºC limit.

Why develop eligibility Criteria for hydrogen investments?

Hydrogen is experiencing unprecedented momentum as a sustainable fuel and feedstock, offering a huge opportunity to replace fossil resources and contribute to the decarbonisation of the economy. Hydrogen production requires high amounts of energy. Most of its production today is based on the cheapest alternatives: natural gas steam reforming and coal gasification. These production pathways have a high carbon footprint, hence making hydrogen production more sustainable is essential to contribute to decarbonisation of the economy

Standards and certification mechanisms will play an essential role in the hydrogen market evolution. Establishing global criteria will foster a level playing field and offer more confidence to investors. Promoting green investments across the whole hydrogen value chain will be essential to develop the hydrogen market.

The Hydrogen Production Criteria

The criteria involve two main components: the mitigation and the adaptation criteria.

The mitigation component includes criteria for:

Decarbonisation measures within facilities producing hydrogen
Production facilities dedicated to the production of hydrogen
Entities that have hydrogen production operations
SLB for hydrogen production projects

The criteria do not use a colour spectrum. They include most of the available technologies and feedstock that can reduce GHG emissions from hydrogen production and are aligned with the goals of the Paris Agreement. Regardless of the production pathway, an emissions intensity benchmark that decreases over time, aiming to reach net zero by 2050, has to be met.

Further, additional requirements must be met for each decarbonisation measure or technology. For example, depending on the feedstock and electricity source, and when using CCS, and CCU infrastructure. These requirements aim to avoid potential sustainability issues.

The adaptation and resilience criteria apply the Climate Bonds Adaptation and Resilience Principles to the hydrogen industry. It includes a checklist to ensure that potential climate risks for hydrogen production projects and facilities are identified, that measures and strategies to reduce these potential risks are defined, and that monitoring, and evaluation programmes are in place.

The Technical and Industry Working Groups (TWG and IWG)

To create the Criteria, we convened a Technical Working Group (TWG) with representatives from academia, public entities, research institutes and international policy bodies from around the world. These experts ensure a robust pragmatic criteria is developed. Later, an Industry Working Group (IWG) was convened with industry experts to review the TWG's draft criteria and provide advice.