Methane Abatement and Carbon Lock-in

The level of financing required to abate methane in two of the main sectors responsible for emissions – agriculture and energy – is low comparative to their revenues; this suggests that the financing challenge can be met. Given its objectives of supporting the economy’s transition to net zero in line with the goals of the Paris Agreement, transition finance should support methane abatement. This document refers to transition finance as the finance supporting the economy-wide transition to net zero.

This report will discuss to what extent the latest guidance by the Climate Bonds Initiative (Climate Bonds), International Capital Market Association (ICMA) and loan market associations supports methane emission reductions, and attempt to find the right balance between being inclusive and maintaining the integrity of transition finance.

Through analysis of the sources of carbon lock-in, the report will suggest an approach that transition finance practitioners, academia, and governments could collectively work on to facilitate assessment of transition finance investments.