Methane is responsible for nearly half of net warming to date. Despite methane’s outsized contribution to global climate change, a new report from CPI estimates that finance for methane emissions abatement only accounts for less than 2% of global climate finance.
Sharp and rapid reductions in methane emissions this decade are essential to limiting global warming to 1.5°C. While carbon dioxide has a longer lasting effect, methane has 80 times the warming power of CO2 in the first 20 years after emissions reach the atmosphere, meaning methane is setting the pace for near-term global warming. Reducing human-caused methane emissions by 30% this decade from 2020 levels, as set out in the Global Methane Pledge, would avert at least 0.2°C in global warming by 2050.
Less than 2% of climate finance TARGETS methane—methane finance must grow at least tenfold to meet 1.5°C aligned pathways
Even though methane is responsible for nearly half of net global warming to date, forthcoming research by CPI finds that finance for methane abatement measures represented less than 2% of total climate finance flows, or just over USD 10 billion, in 2019/2020. A ten-fold increase in methane abatement finance is necessary to meet the estimated more than USD 110 billion needed from private and public sources annually.
CPI published a first-of-its-kind report on methane mitigation finance, aiming to assess global investment in methane abatement activities and create a baseline against which investment needs and progress can be measured. The study focuses on existing and established abatement solutions in three broad sectors: fossil fuels, waste (solid waste and wastewater), and agriculture. Together, these sectors account for 95% of human-made methane emissions.
CPI’s findings show that current investment in targeted methane abatement is not enough to limit global warming to 1.5°C and that the limited existing investment flows are not being directed to the geographies or sectors of highest abatement potential. Key takeaways from the analysis include:
- Methane abatement solutions are severely underfunded considering their climate change mitigation potential. While also underfunded, other climate change solutions with similar mitigation potential, such as low-carbon transport, received 15 times the investment of methane abatement measures, while solutions such as solar and wind received 26 times the investment.
- Almost two-thirds of methane abatement funding was directed towards the waste sector, while 82% of anthropogenic methane emissions originated from activities in the fossil fuel and agriculture sectors.
- Regionally, most methane emissions originate in the East Asia and Pacific region, and most of the methane abatement finance in 2019/2020 was concentrated there. However, significant abatement potential exists in other regions, particularly in Latin America and the Caribbean and Sub-Saharan Africa, respectively the second and third largest methane emitters, which combined attracted only 6% of methane abatement finance.
- The private sector accounted for the majority of tracked financial flows, particularly in more mature segments (e.g., certain waste-to-energy technologies) where commercial viability at scale is well established.
- Within the public sector, development finance institutions were a key source of financing, accounting for 13% of all methane abatement flows in 2019/2020.
Massive gaps in methane finance remain In the fossil fuel sector, despite high mitigation potential
Dramatic reductions in methane from the fossil energy sector are critical to maintaining a 1.5°C-aligned pathway. Despite having the greatest mitigation potential by 2030, tracked investment to cut methane emissions from this sector is less than 1% of methane abatement finance—falling well below investment needs (an average estimated need of over USD 30 billion annually to 2050). The mitigation potential in this sector is large, with the International Energy Agency estimating that it is technically possible to avoid 75% of methane emissions from the oil and gas subsector, with a significant portion of these avoided at no net cost. At today’s high gas prices, nearly all of the methane mitigation potential in the oil and gas sector can be implemented at no net cost. According to an International Energy Agency report released in June 2022, deploying all available abatement technologies to reduce methane emissions and flaring from the oil and gas sector alone can avoid nearly 0.1°C of warming by mid-century—the equivalent of immediately eliminating the greenhouse gas footprint of all cars, trucks, buses, and two- and three-wheelers in the world.
Tracking methane abatement investments in the fossil energy sector presents challenges due to lack of standardized reporting and can be hard to distinguish from business-as-usual operational expenditure. More detailed and transparent information on methane abatement measures by corporate actors in the fossil fuel sector is needed going forward. Public actors have a key role to play in setting technology and emission standards, driving incentives for efficient and impactful capital allocation, and in developing measurement, reporting, and verification standards.
Together with the fossil fuel sector, the agriculture sector is the largest contributor to human-made methane emissions. This sector attracted slightly over one-third of targeted methane abatement finance in 2019/2020. In comparison, the waste sector, responsible for under one-fifth of human-made methane emissions, received more than half of tracked targeted methane abatement finance in 2019/2020. Tracked finance levels are still significantly below estimated needs in both the agriculture and waste sectors.
The study concludes that current volumes of methane abatement finance are not adequate to reduce methane emissions necessary to avoid the worst impacts of climate change. Despite the availability of cost effective and market ready abatement solutions, business and policy strategies for methane reduction are not prioritized by policymakers and investors. The Global Methane Pledge has brought together nearly 120 countries in support of methane emissions reductions. Building on this momentum, countries should next consider rapidly developing concrete methane reduction plans as well as financing strategies.
To ensure key stakeholders adequately invest in methane mitigation, we recommend that public actors:
- Cultivate a strong enabling environment for methane mitigation projects by providing enhanced regulatory signals and binding policy that are tailored to key sectors and specify minimum standards, and penalties, for methane emissions.
- Develop common approaches to tracking the finance for, and impact of, methane abatement interventions, including through improved methane emissions measurement approaches to quantify methane reductions impact of climate finance.
- Build a dedicated pipeline of investable methane reduction projects across sectors, including through existing development and climate finance structures.
- Incentivize the uptake of existing technologies, redirect capital from energy intensive activities to methane reducing activities, and direct spending towards research and development in this space.
- Work to set sector-specific benchmarks and catalogue best practices and investment needs across the key methane-relevant sectors.
We recommend that private sector financial and corporate actors:
- Incorporate ambitious and rapidly escalating methane reduction targets in interim net zero goals.
- Monitor Scope 1, 2, and 3 methane emissions and improve transparency on methane-related capital expenditures.
- Rapidly deploy existing methane abatement solutions and provide catalytic finance support to innovate methane abatement solutions.
- Annually report on progress towards meeting abatement and finance goals.
Methane abatement finance has one of the highest ratios of global warming benefit per dollar of capital invested. Both public and private actors have an essential role to play in closing the methane abatement finance gap. The world cannot avoid the worst impacts of climate change if these actors fail to align global climate finance flows with necessary methane mitigation.
For further details on the report or any interview requests, please contact Caroline Dreyer (firstname.lastname@example.org)
 Includes Agriculture, Forestry, and Land Use