Tackling methane emissions from fossil-fuel operations is one of the quickest and cheapest ways to curb global greenhouse gas emissions. Most of the methane abatement measures available today in the oil and gas sector would be cost-effective at a carbon price of about USD 20 per tonne of carbon dioxide equivalent (tCO2‑eq).

Methane abatement has not caught on as widely as it could, for several reasons. Companies may underestimate of the scale of the problem or be unaware of the available solutions. Capital is often steered toward higher-profile projects, while corporate leaders may overstate the costs of cutting methane. Incentives can also be misaligned: equipment owners do not always benefit from fixing methane leaks, contracts may blunt the impact of savings on revenues, and those who own the gas may not recognise its full value. Upfront investment can be hard to secure, especially in developing economies. Companies may lack the needed staff or specialised services to tackle the problem. And in some cases, they have yet to find a workable way – or a convincing business case – to put captured gas to productive use.

Overcoming these barriers will require co-operation between governments, industry, financiers, international organisations and civil society. Governments can mandate disclosure of methane-related metrics. Investors and lenders can help by factoring methane into their decisions, working with companies to set targets and ensure accountability. Public and philanthropic actors can act as catalysts, supporting project development, building capacity and unlocking additional private finance.

At over 40 million tonnes (Mt), methane emissions from coal are similar to oil. Although capturing and using methane is sometimes economically viable, in most cases the revenue earned would not justify the costs from a purely economic perspective. Even so, cutting these emissions remains a priority – especially for coking coal, which is harder to replace than steam coal and is often mined underground, where abatement is more feasible. Underground mines also have fewer potential point sources of emissions than surface mines or oil and gas operations. Monitoring equipment is already widely used in ventilation shafts for safety, making data easier to collect. That, in turn, can support mine-level plans to use or abate the gas.

Most of the coal industry has yet to commit to tracking or reducing its methane emissions. Some companies take part in initiatives like the United Nations Economic Commission for Europe (UNECE) Group of Experts on Coal Mine Methane and Just Transition, or the Global Methane Initiative. Others address methane within broader climate or sustainability strategies. For example, the Australian group BHP has pledged to minimise fugitive methane “to the greatest extent technically and commercially viable,” using existing or emerging technologies. Anglo American reports investments in methane pre-drainage infrastructure at its underground coking coal operations. Producers who can credibly demonstrate lower methane emissions could gain a commercial edge: Steel producers, for instance, are increasingly looking for ways to lower the lifecycle emissions intensity of their products.

State-owned coal companies accounted for a significant share of global coal production in 2025 and will be central to the outlook for methane emissions from the mining sector. In Asia, state-owned enterprises dominate coal output, with Chinese and Indian state-owned groups collectively responsible for a substantial share of global production. These companies have a range of options to accelerate methane reductions. They can work with governments to strengthen policy on coal mine methane, including the development of national frameworks for capturing and using ventilation air methane. Methane management can also be built into mining operations – for example, by incorporating drainage systems into new mine plans or retrofitting degasification equipment in existing mines. Where capital constraints present a barrier, state-owned coal companies can draw on financing from multilateral development banks or concessional funding tied to methane-abatement outcomes.

We estimate that achieving a 75% reduction in methane emissions from fossil fuels would require around USD 28 billion in spending per year, on average, through 2035. Of this, close to USD 22 billion would be in oil and gas and USD 7 billion in coal. Around USD 21 billion would take the form of capital expenditure and USD 7 billion would be operating costs. In low- and middle-income countries, achieving these reductions would require about USD 28 billion in cumulative spending over the same period.

Companies, financial institutions and governments all have a role to play in unlocking new financing and closing the funding gap. To date, however, external financing aimed at reducing methane emissions in the fossil fuel industry has been very limited.

Fossil fuel companies carry primary responsibility for abating methane emissions, as the average annual spending required amounts to less than 2% of the industry’s annual net income. Yet few companies currently disclose how much they invest in methane abatement across their operations.

Where retained earnings are insufficient to fund methane abatement projects and external support is needed, fossil fuel companies can tap into debt markets. Various instruments are available, ranging from conventional loans and bonds to newer structures like transition-linked, sustainability-linked, and use-of-proceeds bonds.

Voluntary guidance is now emerging to support this. In November 2025, the Methane Finance Working Group – launched at COP28 in 2023 – published guidance on issuing methane-related financial instruments, including use-of-proceeds bonds and key performance indicator (KPI) -linked debt. The aim is to steer capital towards methane abatement, particularly in emerging markets and national oil companies (NOCs).

Financial sector actors (including investors, banks and insurance companies) can integrate methane abatement criteria into investment, lending and underwriting decisions. This can include setting minimum methane-intensity thresholds, requiring transparent and comparable disclosure of emissions, and pushing for verifiable reductions. Loans to oil and gas companies (both conventional and sustainability-linked) can be tied to progress on methane abatement. Insurers can likewise design policies and financial products that reward methane abatement. Some major banks have already begun to reflect methane in their engagement with the fossil fuel industry: JPMorgan Chase, HSBC and Barclays have published methane-management guidelines for their oil and gas clients.

Governments can provide funding for methane abatement projects, particularly where abatement options have net positive costs and access to capital is limited. This can include grants or loans conditional on the deployment of measures to capture and commercialise methane. Natural gas captured from flaring and venting can also be integrated into joint purchasing schemes, such as the European Union’s AggregateEU platform. Funding can likewise be pooled across countries or channelled through multilateral and regional institutions, such as  the World Bank’s Global Flaring and Methane Reduction Partnership trust fund, which provides grants and technical assistance to governments and state-owned operators to support flaring and methane-reduction projects in the oil and gas sector.

One critical area where funding can be directed is access to technology in emerging market and developing economies (EMDEs). Technology access often represents a significant barrier for governments and companies in EMDEs. Public support can help finance the purchase of methane-detection equipment and low-emissions technologies, such as optical gas imaging (OGI) cameras. For some abatement measures, including leak detection and repair (LDAR), both upfront and operating costs are often lower than commonly assumed.

While governments, companies and financial institutions have a range of tools at their disposal to accelerate methane abatement, relatively few projects have so far attracted support. To scale-up financing, governments, companies, financial institutions and international organisations could work together to develop a pipeline of bankable projects, including by funding early-stage development costs for pre-feasibility studies, financial modelling and project structuring. Successful implementation of a few pilot projects could help to demonstrate the viability of the concept, paving the way for wider deployment.

Accurate data is not a prerequisite for tackling methane emissions, but it is extremely valuable. It allows a governments and companies to establish a baseline – an inventory of current emissions – against which progress can be measured. Such data also helps identify the most effective abatement opportunities, along with their costs and potential savings, and also makes it possible to track progress over time.

Pledges to Progress 2025, a joint report by the International Energy Agency (IEA), the International Methane Emissions Observatory (IMEO) and the Environmental Defense Fund (EDF), assessed 116 of the largest oil and gas companies against  25 metrics tracking efforts to meet the goals of  the Oil and Gas Decarbonization Charter (OGDC). It found that half of global production in 2023 came from companies with targets aligned with the charter. Yet only a third was produced by firms that have laid out strategies to meet them, and just a third was covered by disclosures sufficient to gauge progress. In short, transparency and reporting on abatement plans still lag the industry’s stated ambitions.

In 2025, about 70% of global oil and gas production was owned by operating companies; the rest was held by joint ventures and other shared holdings. For international oil companies (IOCs), roughly half of production came from such non-operated stakes. Yet most IOCs exclude these from their climate, methane and flaring targets, and few disclose Scope 1 and 2 greenhouse gas emissions separately for operated and non-operated assets. Greater company-to-company collaboration on methane and flaring will be critical for spreading best practice across the industry; joint ventures offer an important route to broader and deeper emissions cuts.

A key transparency initiative is the Oil and Gas Methane Partnership (OGMP) 2.0, the flagship reporting and mitigation initiative of the United Nations Environment Programme (UNEP). Around 40% of global oil and gas production is now covered by OGMP 2.0’s five reporting levels, which range from emissions-factor estimates (Level 1) to rigorous, measurement-based reporting (Level 5). Based on current membership and implementation plans, Level 5 reporting would rise from 16% of production in 2025 to around 30% by 2030 – and higher if more companies join.

Governments can strengthen transparency by incorporating detailed methane metrics into mandatory corporate disclosure regimes for both fuel producers and buyers. A standardised disclosure framework would enable better comparisons between operators and help investors and other stakeholders encourage fuel buyers to source lower-emissions fuels.

National oil companies (NOCs) accounted for half of global oil and gas production in 2025, and they have a key role to play in shaping the outlook for methane emissions. In the Middle East, NOCs produce around 80% of all oil and natural gas, led by Saudi Arabia’s Aramco and the National Iranian Oil Company. These two companies produce roughly as much oil and gas as all the majors (BP, ConocoPhillips, Chevron, Eni, ExxonMobil, Shell, and TotalEnergies) combined.

More than half of the oil and gas produced by NOCs comes from companies that have signed the OGDC or are members of OGMP 2.0. If these companies were to meet their near-zero methane targets, global emissions would fall by roughly 10 Mt; if all NOCs were to achieve near-zero upstream methane intensity, reductions would reach nearly 30 Mt.

In the Pledges to Progress report, NOCs were found to perform slightly below the industry average on targets, abatement strategies and disclosure. Performance on methane and flaring, however, varies widely: if all NOCs matched Saudi Aramco, for example, flaring volumes would fall by around 60 billion cubic metres (bcm), or about 90%.

NOCs have a range of options to accelerate methane emissions reductions. They can work with host governments to align priorities – coordinating major investment decisions or advocating for stricter regulatory standards. Methane management can also be embedded in operations, for example by integrating equipment upgrades into plans to revitalise aging infrastructure or by developing in-house LDAR programmes.

NOCs can also turn to industry peers and initiatives for technology sharing and support on technical, operational, and regulatory matters. For example, the Japan Organisation for Metals and Energy Security (JOGMEC) has signed arrangements with PETRONAS and Pertamina to advance collaboration on methane measurement and reduction, while TotalEnergies is partnering with Petrobras, Sonangol and SOCAR to share its drone-based detection technology. The OGDC has launched the Collaborate & Share Program to encourage peer-to-peer exchanges, foster collaboration and encourage best practices. Where access to capital is constrained, NOCs can also tap into financing opportunities such as multilateral development bank funding or sustainability-linked debt instruments.