Inclusion of Methane Abatement Measures in Transition Finance

The report argues that rapid methane abatement is a priority for transition finance due to its immediate impact on limiting global warming to 1.5°C. It analyzes the current financing landscape, noting a significant gap between the USD 9.6bn in private methane finance (2021/2022) and the estimated USD 48bn to USD 100bn required annually by 2030. Through case studies of 20 corporates, the report finds that while oil and gas firms generally integrate methane abatement into short-term strategies, agrifood firms struggle with supply chain tracking and specific targets. To address this, the report promotes the use of Use of Proceeds (UOP) and sustainability-linked instruments guided by Climate Bonds and Methane Finance Working Group (MFWG) criteria to ensure investments contribute to decarbonization without locking in high-carbon assets.

• There is a substantial funding gap for methane abatement; private sources provided USD 9.6bn in 2021/2022, far below the estimated USD 48bn per year needed by 2030 across all sectors and the IEA's estimate of USD 100bn until 2030 for the oil and gas sector alone.
• Methane abatement offers significant economic opportunities, with the IEA estimating that 40% of upstream oil and gas methane emissions worldwide could have been avoided at no net cost in 2024, and over half of agricultural options being low-cost or negative cost.
• In the agrifood sector, there is a strong disparity in methane strategy maturity; while some dairy and rice firms have validated targets, meat producers generally lack strong commitments, and most agrifood corporates have not set specific methane reduction targets due to supply chain tracking challenges.
• Oil and gas corporates frequently include methane abatement in short-term strategies, but many lack scope 3 emission reduction targets and continue to expand fossil-fuel capacity, which the report argues undermines the credibility of their net-zero commitments and sustainability-linked debt.
• The Methane Finance Working Group (MFWG) guidance for the oil and gas sector identifies five core KPIs for sustainability-linked instruments: MVR system robustness, absolute methane emissions, methane emissions intensity, the ability to address major emission sources, and flaring intensity targets.
• To prevent 'carbon lock-in'—where early decisions constrain future low-carbon paths—the report recommends using Use of Proceeds (UOP) instruments to ring-fence finance for specific climate solutions rather than general corporate purposes.
• The report identifies specific eligible UOP activities for the agrifood sector, including rice production management plans, livestock system transformation, R&D for meat and dairy alternatives, and waste-to-energy projects from manure.
• Jurisdictional entities, such as sovereigns and municipalities, are positioned to catalyze methane abatement by supporting National Oil Companies (NOCs), addressing abandoned facilities, and funding local circular economy bioenergy projects.
• The Oil and Gas Methane Partnership 2.0 (OGMP 2.0) is highlighted as the most comprehensive reporting standard, with 'gold standard' reporting requiring independent site-level measurements to validate emissions.

APA

Laurent, S., & Sharma, D. (2025). Inclusion of Methane Abatement Measures in Transition Finance. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/CBI-Inclusion-of-Methane-Abatement-Measures-in-Transition-Finance.pdf

Chicago

Laurent, Sabine, and Deepak Sharma. Inclusion of Methane Abatement Measures in Transition Finance. Climate Bonds Initiative, 2025. https://www.climatebonds.net/files/documents/publications/CBI-Inclusion-of-Methane-Abatement-Measures-in-Transition-Finance.pdf.

Wikipedia

{{cite report |last1=Laurent |first1=Sabine |last2=Sharma |first2=Deepak |title=Inclusion of Methane Abatement Measures in Transition Finance |publisher=Climate Bonds Initiative |date=October 2025 |url=https://www.climatebonds.net/files/documents/publications/CBI-Inclusion-of-Methane-Abatement-Measures-in-Transition-Finance.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{laurent2025inclusion, author = {Laurent, Sabine and Sharma, Deepak}, title = {{Inclusion of Methane Abatement Measures in Transition Finance}}, institution = {Climate Bonds Initiative}, year = {2025}, month = oct, url = {https://www.climatebonds.net/files/documents/publications/CBI-Inclusion-of-Methane-Abatement-Measures-in-Transition-Finance.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }