CPI report urges sustainable finance taxonomies to prioritise methane abatement

The Climate Policy Initiative and Climate Bonds Initiative published a report calling for global sustainable finance taxonomies to integrate robust methane abatement criteria after analysing five jurisdictions' frameworks. Indian and other taxonomy developers face a roadmap to close structural weaknesses, with annual methane abatement investment of under USD 14 billion far short of the USD 48 billion needed yearly through 2030.

The Climate Policy Initiative and Climate Bonds Initiative released a report calling for restructuring of global sustainable finance taxonomies to integrate methane abatement criteria. Methane has a global warming potential more than eighty times that of carbon dioxide over twenty years. Annual methane abatement investment totalled less than USD 14 billion in 2021/22, dropping further in 2023 and falling far short of the estimated USD 48 billion needed annually through 2030. The report comparatively analysed taxonomies of Colombia, the European Union, Indonesia, South Africa, and Thailand to assess methane mitigation integration.

The findings affect policymakers, taxonomy developers, green-bond and sustainability-linked loan issuers, and investors across the energy, agriculture, waste, and wastewater sectors. The report identified three structural weaknesses: incomplete sectoral and activity coverage leaving major methane-emitting activities unfunded; the sacrifice of technical rigour for usability, replacing science-based thresholds with generic requirements like broad "monitoring plans"; and a lack of specificity in Technical Screening Criteria and safeguards, with emission thresholds and acceptable leakage rates often absent or qualitative, particularly in agriculture and waste, risking minimal or negative net methane outcomes.

Policymakers and taxonomy developers should adopt the report's recommended best practices, tailored to specific economic activities and emphasising clarity and science-based alignment, to rectify inconsistencies in their frameworks. Jurisdictions should ensure complete sectoral coverage across energy, agriculture, waste, and wastewater, embed measurable emission thresholds and leakage rates within Technical Screening Criteria, and preserve technical rigour. Harmonisation will reduce transaction costs for investors and accelerate capital mobilisation toward high-impact, short-term climate solutions critical for meeting global temperature goals.

Key figure — Annual methane abatement investment gap: under USD 14 billion versus USD 48 billion needed yearly through 2030