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A call to action: The international community must scale support for methane mitigation

October 14, 2022 Work Area: Methane

Despite broad agreement on the importance of fast action to mitigate methane, the international community has been slow in delivering the needed financial and capacity support. 

In its recent submission to the UNFCCC Global Stocktake, Clean Air Task Force highlighted the gap in methane financing and capacity support, and identified a path forward to unleash the power of the financial community to facilitate deep reductions in methane and contribute to bending the curve on climate.  

Methane mitigation is an essential climate mitigation strategy 

Methane is responsible for roughly half of the global warming that we are experiencing today, and because of its shorter time in the atmosphere and higher potency (a global warming potential more than 80 times that of carbon dioxide (CO2) over a 20-year period), reducing methane will yield fast climate benefits. In fact, cutting methane pollution is our best strategy to slow near-term warming and help keep rising temperatures within livable limits. 

To keep 1.5 degrees Celsius within reach, the IPCC called for reducing methane by 45% by 2030 relative to 2010 levels, in addition to deep cuts in carbon dioxide. The International Energy Agency’s 2021 net-zero emissions pathway includes a 75% reduction in fossil fuel methane within ten years. Responding to the call, 120 countries — including 70 developing countries eligible for overseas development assistance — signed the Global Methane Pledge committing to reduce their collective methane emissions by 30% by 2030. 

Low-cost methane mitigation opportunities are available

Across the three sectors responsible for roughly 80% of anthropogenic methane emissions — oil and gas, waste (municipal solid waste and wastewater), and agriculture — there are numerous proven mitigation options that are relatively inexpensive. Of the more than 150 MMT of methane abatement opportunity identified by McKinsey in their 2021 report, 80% of the identified abatement measures can be implemented at a cost of $10 per metric ton of CO2 or less (Figure 1). Reducing methane emissions will also lead to public health and development benefits, including reduced numbers of premature deaths and hospital visits, reduced crop losses, and reduced food waste

Figure 1. Global methane abatement cost curve, 2050.

Source: McKinsey 2021

The international community is underinvesting in methane 

Despite the availability of well-understood, low-cost mitigation opportunities, the Climate Policy Initiative (CPI) reports that investments are falling far short of the need. CPI found that finance for methane abatement accounted for less than two percent of total climate finance flows in 2019 and 2020. In fact, funding for methane mitigation lags far behind investments in other sectors with comparable mitigation opportunity such as renewable energy and low-carbon transport (Figure 2). This is particularly the case when the 20-year global warming potential is considered, as shown.     

Figure 2. Finance flows in different sectors compared to their net emission reduction potential.

Source: Adapted from Climate Policy Initiative 2022. A 20-year global warming potential (GWP) is applied to the mitigation potential for methane abatement measures to illustrate the potent near-term impact of such measures. Mitigation from renewable energy and low carbon transport is assumed to be primarily from CO2.

Rapidly increasing the level of finance available for methane abatement is essential to scaling up project development and implementation globally; Climate Policy Initiative estimates that more than $100 Billion USD is needed annually.   

More  than $100 billion in methane finance is needed annually.

Addressing structural barriers will be key to methane mitigation 

To understand why methane mitigation measures are not being implemented at scale, Clean Air Task Force (CATF) has reviewed the funding data and consulted with a range of donor governments, financial institutions, and other stakeholders in the finance community.  Like CPI, we found there is a lack of funding earmarked for and flowing to methane abatement projects and that these projects are not well-identified and tracked. We also identified a number of structural constraints on both the supply- and demand-sides that may be contributing to a dearth of methane mitigation projects and, consequently, limited international financial and capacity support (Figure 3).  

Figure 3. Constraints to scaling-up implementation of methane abatement projects.

Among our key findings, we learned that most donors do not prioritize methane mitigation projects. Champions for methane abatement do not exist within most funding institutions, and methane is not given priority within sector-based funding strategies, where most funding is development-focused and responsive to developing country requests. For projects that do involve methane mitigation, methane is at best a co-benefit, not a driver, and projects are not optimized for methane. Further, methane mitigation is not well tracked, so efforts to evaluate methane funding are often limited to considering project types known to have a methane mitigation component. 

But CATF was also informed by many institutions that they would fund methane mitigation projects but were not receiving many high-quality proposals. Before the impetus of the Global Methane Pledge, most countries had not requested funding for methane mitigation projects, or prioritized methane mitigation in national goals, climate plans, or finance strategies. Methane abatement projects can also be complex, requiring coordination across different departments, ministries, or even levels of government, and sometimes involving structural changes within a sector. Coupled with a lack of funding and capacity to develop climate focused projects and proposals in many countries, this has led to a lack of a quality methane project pipeline that could be put forward to financial institutions. 

Recommendations to scale-up methane finance 

To achieve the rapid scaling of methane abatement required to slow warming and keep temperatures within livable limits, it will be necessary to significantly scale the amount of funding donor governments pledge for methane mitigation projects. However, to help countries make use of implementation finance and ensure donors are well-prepared to fund such projects, there needs to be: 

  1. An intensified focus on development of investable projects, pipelines, and policies to create enabling environments; 
  1. A stronger appreciation by international financial institutions and project developers of the climate imperative of methane mitigation projects and how such projects can support sustainable development outcomes; and 
  1. Improved partnerships among countries and financial institutions to share best practices on methane mitigation, and among national and local governments to prioritize and finance local projects. 

Developing countries need funds immediately to build capacity and create the project pipelines and enabling environments that will allow them to develop quality methane mitigation projects that meet the investment standards of climate funds and other international financial institutions. 

Finally, to be sure the international mitigation frameworks are firing on all cylinders in support of methane mitigation, we must pay renewed attention to how carbon markets can help pay for the implementation of methane mitigation projects in ways that avoid problematic tradeoffs between short- and long-lived climate pollutants. Likewise, enhanced attention to measurement, reporting, and verification of project emissions and funding will improve the quality of future evaluations of methane finance and mitigation outcomes. 

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