Tackling methane emissions from fossil fuel operations represents one of the fastest and lowest-cost opportunities to reduce greenhouse emissions globally. Almost all the available methane abatement measures across the energy sector would be cost-effective to deploy in the presence of a greenhouse gas emissions price of about USD 20/tCO₂‑eq.

Several factors explain why methane emission reduction measures have not been deployed more widely. For example, companies could be unaware of the scale of the problem or the available solutions. There may be higher-profile opportunities competing for investment resources, or leadership may perceive methane abatement as more costly than it is. There may be split incentives, whereby equipment owners do not directly benefit from reducing methane leaks, the contractual terms prevent methane savings from affecting revenue, or the owner of the gas does not see its full value. Securing capital for required upfront investments can be difficult, especially in developing economies. Companies may struggle to muster sufficient staff or secure the necessary services to tackle the problem. Or they may not have identified an effective pathway or business case for bringing captured gas to productive use.

Overcoming these barriers requires co-operation between governments, industry, the finance community, international organisations and civil society. Investors and financiers can play an important role by incorporating information on methane in their activities, as well as collaborating with companies to set targets and ensure accountability. Public and philanthropic actors can serve as catalysts by supporting project identification, building capacity and unlocking additional private finance.

While the need to tackle methane emissions is generally well-understood, actors often lack the technical expertise or resources to implement reduction strategies. This includes governments that want to introduce or refine regulations targeting methane emissions and strengthen implementation efforts but do not yet have the capacity to do so. Similarly, companies may lack the technical expertise to develop viable emissions-reduction projects or struggle to access the necessary technology.

Several initiatives have emerged to help bridge these gaps. They support methane cuts through the sharing of best practices, building capacity or providing financial support and other forms of assistance. The IEA is engaged or affiliated with many of these efforts, which include:

• UNEP’s International Methane Emissions Observatory (IMEO), which delivers training and technical guidance to governments and companies looking to reduce methane emissions from the oil and gas sector. The IMEO also conducts scientific studies and analysis with data provided through an online portal.
• OGMP 2.0, which provides a reporting framework for methane emissions in the oil and gas sector, fosters best-practice sharing and supports companies and governments in adopting robust measurement and verification standards to drive emissions reductions.
• The Fossil Fuel Regulatory Programme (FFRP), initiated by the Climate and Clean Air Coalition (CCAC) and the Clean Air Task Force. This will support up to 20 developing country governments over the next three years with tailored support for building capacity, regulatory development and enforcement. The IEA co-implements the FFRP in Kazakhstan and Iraq.
• The World Bank’s Global Flaring and Methane Reduction Partnership (GFMR), which focuses on providing grant funding and mobilising financing to help governments and state-owned operators deploy flaring and methane reduction solutions in the oil and gas sector.
• The Global Methane Hub, which supports methane reduction efforts through grant-making and partnerships.
• The CCAC’s Methane Roadmap Action Programme (MRAP), which supports Global Methane Pledge countries eligible for official development assistance in developing national methane roadmaps and action plans. MRAP establishes priorities for action and advocates for methane’s inclusion in governments’ Nationally Determined Contributions (NDCs).
• Tools and resources from the Oil and Gas Climate Initiative, the Global Methane Initiative and the Methane Guiding Principles.

The IEA provides support to governments looking to reduce methane emissions from the energy sector. Through its Methane Tracker Database, the IEA provides information and data on methane emissions, abatement, costs and policies – at both the regional and individual country level. In addition, through its Policies Database, the IEA has compiled a catalogue of more than 600 existing and announced policies and regulations related to methane emissions.

The IEA also leverages its convening power and its network of national regulators to support the development of regulatory frameworks for curtailing methane emissions in the fossil fuel sector. In September 2024, the IEA hosted a high-level event on Turning Methane Pledges into Action. This was followed by the launch of a series of regional roundtables on methane focused on the challenges and opportunities for emissions control and abatement in specific regions.  

We estimate that around USD 260 billion in spending is needed through to 2030 to implement all of the methane abatement measures required to reach a 75% reduction in methane emissions. This includes USD 175 billion from the oil and gas sector and USD 85 billion from the coal sector. Roughly USD 215 billion would take the form of new capital expenditure, while USD 45 billion represents operational expenditures. A significant share of this investment is linked to properly closing abandoned facilities, with just over USD 100 billion needed to monitor and plug abandoned wells with significant levels of emissions.

Fossil fuel companies should carry the primary responsibility for abating methane emissions, as the average annual spending required represents less than 2% of the net income the industry generates annually. To encourage methane abatement, companies could integrate methane-specific performance indicators into their financial and operational strategies (such as tying them to employee and executive compensation). They might also consider establishing an internal price for methane when making capital investment decisions related to both new and existing projects.

In some cases, external support may be needed – particularly when the available abatement options have net positive costs and access to capital is limited. Natural gas subsidies present another potential barrier. National oil companies (NOCs) are often constrained by competing priorities for domestic spending, especially within low- and middle-income countries, and may require tailored approaches to drive investment in methane abatement. Projects involving high upfront capital costs could require dedicated financing, while those facing high operational costs may need continuous support.

We estimate the financing gap for fossil fuel methane abatement in low‑ and middle-income countries to be around USD 60 billion (roughly USD 40 billion for active operations and USD 20 billion for abandoned facilities). Some resources, such as the World Bank’s Global Methane and Flaring Reduction (GFMR) trust fund, are available, but new sources of financing are needed. To date, external financing aimed at reducing methane in the fossil fuel industry totals less than USD 1 billion, although this could catalyse much larger financial commitments.

By helping to bridge this financing gap, investors can help drive reductions in methane emissions from fossil fuels. Financiers have a number of levers at their disposal: they can promote strict performance standards and push for verifiable methane reductions as well as transparent and comparable disclosures on measured emissions. Financial instruments, including sustainability-linked bonds or loans, use-of-proceeds bonds and conventional instruments can all be linked to progress on methane abatement. Insurers, too, can develop policies and financial products that incentivise methane abatement.

The Methane Abatement Financing Taskforce, an initiative launched in 2023 during the UNFCCC’s COP28 conference in Dubai, aims to increase investment in methane emissions reductions projects through these market mechanisms. It is developing voluntary methane-specific guidance for oil and gas companies and financiers, in line with the International Capital Market Association guidelines for green, sustainability and sustainability-linked bonds and with the Climate Transition Finance Handbook. The guidance accommodates the governance, technical capacity and capital structure of capital seekers and counterparties, with a particular focus on emerging markets and national oil companies.

Some actors have already incorporated methane abatement goals into their engagement with the fossil fuel industry. The world’s 14 largest financial companies –   including JPMorgan Chase, HSBC and Barclays – have produced methane management guidelines for their oil and gas sector clients. Leading multilateral development banks, such as the World Bank and the Asia Development Bank, have also issued similar guidelines. The World Bank’s GFMR provides catalytic grant funding and technical assistance, while also helping mobilise financing to support flaring and methane reduction projects in state-owned oil and gas operations.

Accurate data is not a prerequisite for tackling methane emissions, but it is extremely helpful. It allows a jurisdiction or company to effectively target methane emissions by identifying major sources, abatement opportunities, costs and potential savings, while tracking progress over time.

Currently, most company and country methane inventories are based on multiplying activity data (e.g. the number of facilities or the extent of operations) by standardised emission factors (e.g. default values or leak rates for particular types of equipment). Measurements from satellites and airborne observations suggest that actual emissions levels are often much higher (e.g. in Europe and South America). Efforts are underway to reconcile these two approaches to estimating emissions, and these suggest that existing inventories often fail to capture certain sources of emissions, particularly accidental and high-emitting leaks.

Globally, we estimate that methane emissions from the energy sector are about 80% higher than the total reported by national governments. The quality of reporting also varies widely – with many oil and gas companies failing to report emissions at all. Were the oil and gas companies that report their emissions fully representative of the entire industry, it would imply that methane emissions are more than 90% below our estimates.

There are many possible reasons for these differences. For example, many official greenhouse gas submissions to the UNFCCC have not been updated for years. It is likely that the companies that report emissions are among the better performers or more motivated to address methane – meaning that they may not fully represent the broader industry. Companies that are reporting emissions may be relying on inventory data that does not consider methane measurements. Recent UNEP analysis suggests that emissions reported by OGMP 2.0 companies will continue to increase as companies improve the quality of their data.

Another major cause of uncertainty is the lack of data transparency and disclosure. Companies that are part of OGMP 2.0 have committed to detailed emissions reporting for all operated and non-operated assets within a set timeframe. But not all companies have joined transparency initiatives. Some companies have cited commercial sensitivities as a reason for not detailing their methane emissions, but they could do more to explain these concerns and help to advance solutions that enable greater scrutiny of reported data. This is essential for building regulatory and public confidence in the actions being taken, and it is particularly important for companies looking to demonstrate that they have already achieved a very low methane emissions intensity.

New satellites and data processing techniques now enable detection and quantification of a range of emissions, from major leaks over a large area to small leaks at the facility level. New satellites have recently been launched, including MethaneSAT, Tanager-1, EMIT, and EnMap, which provide publicly available data with high resolution and sensitive detection thresholds. These have already started to improve methane quantification capabilities, raise public awareness and support regulatory oversight. UNEP’s Methane Alert and Response System compiles data from several of these satellites – including EMIT, EnMAP, Landsat, PRISMA and Sentinel 2 – and has released data on more than 7 000 leaks in the fossil fuel sector. Satellites excel at detecting persistent leaks, and advancements in data processing have enhanced capabilities for monitoring offshore sources.

Unlike satellites with large detection areas for spotting emissions, certain satellites have a much finer resolution and can target specific locations. For example, data provided to the IEA by GHGSat indicated that in 2024, GHGSat’s satellites conducted 16 400 observations at oil, gas and coal facilities around the world. Of these, around 4 100 detected emissions and just under 11 700 leaks were identified (multiple leaks were often seen during a single observation). Around 9 600 of the leaks were associated with oil and gas operations, while just over 2 100 were observed at coal operations. The share of observations that detect emissions varies widely by region: only around 10% of observations conducted at oil and gas facilities in Europe saw any emissions, while almost half of the observations conducted in Eurasia detected at least one methane leak.

Satellite technologies and data processing techniques are not perfect. They can struggle to provide readings in many environments such as offshore areas, mountain ranges, snowy or ice-covered regions, and at high latitudes. Although there have been recent improvements, satellite observations can still be impaired by cloud cover, limiting the number of days when detection is possible. This makes observation more difficult in countries with dense forests or in equatorial regions, such as Nigeria or Venezuela.

Other detection and measurement campaigns will remain essential, not least because most satellites are best at detecting large and persistent leaks. The optimal system will combine satellite measurements with drone-based and other aerial surveys, ground-based sensors and surveys, and continuous monitoring devices that are geographically and temporally representative.  

More than 40% of global oil supply and close to 20% of natural gas and coal supply is traded internationally. This presents a major opportunity for buyers to work with suppliers to reduce methane emissions along international fossil fuel supply chains with little to no impact on fuel prices.

Harmonised measurement, monitoring, reporting and verification standards are an important enabler for markets to act on emissions. Several ongoing initiatives serve as examples, including: UNEP’s OGMP 2.0, the Coalition for LNG Emission Abatement toward Net Zero (CLEAN), and the MMRV Working Group launched by 12 countries and the European Union in 2023.

So far, the market for fossil fuels with certified methane emissions remains limited, but better access to data might help change this. For example, there are options to certify LNG, but currently these involve small gas volumes and can lack strong incentives for emissions reduction. New services are tapping into the growing availability of satellite-data to guide market choices and potentially open new avenues for cutting emissions.