Financing China’s Methane Abatement

The report identifies China as the world's largest methane emitter and explores how sustainable finance can bridge the investment gap for abatement. It highlights the 2025 NDC update as a critical window for action and recommends the integration of quantitative methane targets, expanded green taxonomies, and the inclusion of methane in the national emissions trading system to mobilise the estimated USD 7.7 billion in annual investment needed.

• China is the world's largest national methane emitter, contributing 16% of global emissions. In 2021, total emissions were 60.6 million tons, with the energy sector (46%), agriculture (40%), and waste treatment (12%) being the primary sources.
• China's 2025 update to its Nationally Determined Contribution (NDC) marks a turning point by including non-CO2 greenhouse gases for the first time, committing to a 7-10% reduction in economy-wide net GHG emissions from peak levels by 2035.
• China's annual investment requirement for methane abatement is estimated at approximately USD 7.7 billion (CNY 55.2 billion).
• Significant technical abatement potential exists by 2030: the coal industry could reduce emissions to 34-45% of baseline levels, agriculture could see a 33% reduction in rice cultivation and 36% in livestock, and the oil and gas sector shows high cost-effective potential due to the economic benefit of recovering methane.
• The 2025 edition of the Green Finance Endorsed Project Catalogue has expanded to explicitly include methane reduction in rice cultivation, enteric fermentation reduction in livestock, and waste gas recovery equipment manufacturing.
• China's national emissions trading system (ETS) currently covers CO2, CF4, and C2F4, but does not yet include methane, which the report argues would exert necessary regulatory pressure on the electricity and petrochemical sectors.
• The China certified emission reduction (CCER) voluntary market provides a mechanism for monetising methane abatement, with specific methodologies released in 2024 for low-concentration coalbed methane and oilfield-associated gas recycling.
• Abandoned coal mines are a major emission source, accounting for 10% of China's energy sector emissions, yet there is a regulatory gap in emission standards for non-operational mines compared to active ones.
• Multilateral development banks are currently leading methane finance in China, as evidenced by World Bank loans for rice paddy methane reduction in Hunan (USD 255m) and livestock development in Gansu (USD 200m), and an ADB loan for gas pipeline upgrades in Henan and Hebei (USD 125m).

APA

Xie, W., Chen, Y., Xu, X., Li, S., Jin, P., Burge, L., Van Coppenolle, M., Maxwell, S., & Harrison, C. (2026). Financing China’s Methane Abatement. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Climate-Bonds_Financing-China%E2%80%99s-Methane-Abatement_Report_EN_Mar-2026.pdf

Chicago

Xie, Wenhong, Yunhan Chen, Xiaoyun Xu, Shaoxin Li, Patrick Jin, Lily Burge, Magali Van Coppenolle, Sarah Maxwell, and Caroline Harrison. Financing China’s Methane Abatement. Climate Bonds Initiative, 2026. https://www.climatebonds.net/files/documents/publications/Climate-Bonds_Financing-China%E2%80%99s-Methane-Abatement_Report_EN_Mar-2026.pdf.

Wikipedia

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BibTeX

@techreport{xie2026financing, author = {Xie, Wenhong and Chen, Yunhan and Xu, Xiaoyun and Li, Shaoxin and Jin, Patrick and Burge, Lily and Van Coppenolle, Magali and Maxwell, Sarah and Harrison, Caroline}, title = {{Financing China’s Methane Abatement}}, institution = {Climate Bonds Initiative}, year = {2026}, month = feb, url = {https://www.climatebonds.net/files/documents/publications/Climate-Bonds_Financing-China%E2%80%99s-Methane-Abatement_Report_EN_Mar-2026.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }