New Climate Tools for Financial Institutions

This report by RMI argues that financial institutions (FIs) can use asset-level emissions modeling and remote detection technologies to identify and fund methane abatement in the oil and gas sector. It highlights that methane emissions from equivalent volumes of oil and gas can vary by a factor of 10 or more, and that a significant portion of these emissions can be reduced through cost-neutral or profitable investments. The document advocates for the use of 20-year Global Warming Potential (GWP) metrics to better reflect near-term climate risks and the impact of new regulations, such as the US Inflation Reduction Act's methane fee.

• Methane emissions from the oil and gas industry account for approximately half of the sector's corporate greenhouse gas emissions, with significant variability between assets. RMI's OCI+ modeling indicates that emissions from equivalent volumes of oil and gas assets can differ by a factor of 10 or more when using a 20-year global warming potential.
• A substantial portion of methane abatement in the oil and gas sector is economically viable. The International Energy Agency (IEA) estimates that 40% or more of the sector's overall methane emissions could be reduced using measures that are either net profitable or cost neutral, and up to 75% could be reduced using existing technologies.
• Financial institutions can utilize a combination of bottom-up modeling (such as RMI's OCI+) and top-down remote sensing (satellites and aircraft) to identify 'super-emitting' events and routine leakage. This 'climate intelligence' allows FIs to manage climate risk, set more accurate financed emissions targets, and steer capital toward profitable decarbonization opportunities.
• New regulatory frameworks are increasing the financial risks for high-methane emitters. In the United States, the Inflation Reduction Act (IRA) introduces a direct fee on methane leakage, while the EU is implementing a Carbon Border Adjustment Mechanism that may expand to cover methane.
• The report urges financial institutions to adopt a 20-year Global Warming Potential (GWP20) rather than the traditional 100-year metric (GWP100) to evaluate methane. This shift is necessary to align with the 2030 deadline of the Global Methane Pledge and to incentivize the near-term warming reductions required to meet 1.5°C targets.

APA

Gordon, D., Kornbluh, E., Huffman, M., Marchán, E., & Conway, T. (2023). New Climate Tools for Financial Institutions. RMI. https://rmi.org/app/uploads/2023/11/new_climate_tools_for_financial_institutions.pdf

Chicago

Gordon, Deborah, Evan Kornbluh, Michael Huffman, Estefanía Marchán, and TJ Conway. New Climate Tools for Financial Institutions. RMI, 2023. https://rmi.org/app/uploads/2023/11/new_climate_tools_for_financial_institutions.pdf.

Wikipedia

{{cite report |last1=Gordon |first1=Deborah |last2=Kornbluh |first2=Evan |last3=Huffman |first3=Michael |last4=Marchán |first4=Estefanía |last5=Conway |first5=TJ |title=New Climate Tools for Financial Institutions |publisher=RMI |date=November 2023 |url=https://rmi.org/app/uploads/2023/11/new_climate_tools_for_financial_institutions.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{gordon2023new, author = {Gordon, Deborah and Kornbluh, Evan and Huffman, Michael and Marchán, Estefanía and Conway, TJ}, title = {{New Climate Tools for Financial Institutions}}, institution = {RMI}, year = {2023}, month = nov, url = {https://rmi.org/app/uploads/2023/11/new_climate_tools_for_financial_institutions.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }