Guidance for Including Methane Abatement in Oil and Gas Debt Structuring

The Guidance for Including Methane Abatement in Oil and Gas Debt Structuring offers a framework for using debt capital markets to fund emissions reductions in the oil and gas sector. It specifically targets National Oil Companies (NOCs) and independent producers, providing detailed criteria for qualifying projects in use-of-proceeds (UoP) instruments and defining core and secondary key performance indicators (KPIs) for KPI-linked instruments. The document emphasizes the need for measurement-based quantification, external verification by subject matter experts, and guardrails to prevent greenwashing and 'transferred emissions' during asset mergers and acquisitions.

• National Oil Companies (NOCs) are critical targets for these financial mechanisms because they control more than half of the world's reserves, production, and methane emissions, yet often struggle to access capital markets for mitigation.
• There is a significant near-term opportunity for financial intermediaries to influence the sector, as nearly two-thirds of outstanding oil and gas company debt will mature within five years, requiring refinancing before 2030.
• The total investment required to deploy methane abatement measures in line with the IEA Net Zero Emissions (NZE) scenario by 2030 is estimated between $175 billion and $200 billion, representing less than 1% of the industry's 2022 net income.
• For Use-of-Proceeds (UoP) instruments, the guidance establishes guiding principles that prioritize projects with limited carbon lock-in risk, high permanence, and completeness of emissions reductions, while explicitly prohibiting the use of funds for developing new oil and gas fields.
• The guidance defines five 'Core KPIs' for KPI-linked instruments: measurement-based source-level inventories, methane intensity, absolute methane emissions, super-emitter monitoring and abatement, and flaring intensity.
• To address poor data quality, the guidance suggests 'activity-based' secondary KPIs—such as leak detection and repair (LDAR) programs—which allow companies to implement 'no regrets' fixes while working toward robust measurement-based quantification.
• To prevent 'transferred emissions' where companies meet targets by selling high-emitting assets to less rigorous operators, the guidance recommends pre-deal due diligence on acquirers and continued public reporting of emissions after the transaction.
• The framework mandates a hierarchy of quantification norms, urging capital seekers to avoid generic emission factor-based estimates and instead move toward continuous direct measurement and site-level reconciliation.
• External review is strongly recommended at three stages: initial consultation for strategy, a pre-transaction Second Party Opinion (SPO) to judge ambition, and annual post-transaction auditing to verify actual reductions.

APA

Climate Bonds Initiative (2025). Guidance for Including Methane Abatement in Oil and Gas Debt Structuring. https://www.climatebonds.net/files/documents/publications/Methane-Finance-Working-Group_Climate-Bonds_Guidance-for-Including-Methane-Abatement-in-Oil-and-Gas-Debt-Structuring.pdf

Chicago

Climate Bonds Initiative. Guidance for Including Methane Abatement in Oil and Gas Debt Structuring. 2025. https://www.climatebonds.net/files/documents/publications/Methane-Finance-Working-Group_Climate-Bonds_Guidance-for-Including-Methane-Abatement-in-Oil-and-Gas-Debt-Structuring.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=Guidance for Including Methane Abatement in Oil and Gas Debt Structuring |date=June 2025 |url=https://www.climatebonds.net/files/documents/publications/Methane-Finance-Working-Group_Climate-Bonds_Guidance-for-Including-Methane-Abatement-in-Oil-and-Gas-Debt-Structuring.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2025guidance, author = {{Climate Bonds Initiative}}, title = {{Guidance for Including Methane Abatement in Oil and Gas Debt Structuring}}, institution = {Climate Bonds Initiative}, year = {2025}, month = jun, url = {https://www.climatebonds.net/files/documents/publications/Methane-Finance-Working-Group_Climate-Bonds_Guidance-for-Including-Methane-Abatement-in-Oil-and-Gas-Debt-Structuring.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }