By Thomas Fugelsang, Managing Director, Entoro Capital, LLC
This article is the second in a series of three on methane finance.
Sustainable debt has become one of the largest dedicated pools of environmental capital in the world. By the end of June 2026, Climate Bonds Initiative had recorded $7.3 trillion of cumulative green, social, sustainability and sustainability-linked debt aligned with its methodologies, representing 83 percent of the $8.8 trillion it had tracked since 2006.
The previous piece in this series laid out the methane mismatch: the emissions are increasingly measurable, much of the technology needed to reduce them already exists, and financing remains far below the opportunity.
That raises a narrower question. If sustainable debt can mobilize trillions of dollars, why has methane been so difficult to finance through it?
The problem was fit
The labelled bond market has been highly effective at financing projects such as renewable energy, clean transportation and green buildings. ICMA itself notes, however, that sustainable bonds have contributed less to the transition of fossil-fuel and other high-emitting sectors.
Methane abatement illustrates the problem.
Replacing a pneumatic controller, installing vapor recovery or repairing leaking equipment can produce a substantial emissions reduction without changing the fundamental character of the underlying facility. The project becomes cleaner. The oil or gas asset does not become a renewable-energy asset.
That made methane an awkward fit for a market historically dominated by clearly identifiable green assets.
Transition finance opened the door
In November 2025, ICMA introduced its Climate Transition Bond Guidelines, creating a standalone use-of-proceeds label intended particularly for projects in high-emitting sectors.
Importantly for methane, the guidelines explicitly identify methane and flaring abatement in existing oil and gas infrastructure as a potential climate-transition project category. They exclude enhanced oil recovery and greenfield exploration and production, and require the project to sit within broader safeguards around emissions reductions, transition strategy and carbon lock-in.
That is a meaningful change. Methane no longer lacks an obvious place in the labelled debt framework.
But a label answers only part of the financing question.
Allocation is not performance
A Climate Transition Bond is still a use-of-proceeds instrument.
The issuer tracks where the proceeds are allocated and reports on the projects financed. ICMA also recommends reporting expected or achieved impact and, where feasible, quantitative performance measures.
What the structure does not inherently do is make the bond’s economics depend on how much methane was actually eliminated.
That distinction matters. If a methane program dramatically exceeds its reduction target, a conventional use-of-proceeds structure does not automatically increase the investor’s return. If the program underperforms, it does not automatically reduce that return either.
There is already another part of the sustainable-debt market designed differently. Under ICMA’s Sustainability-Linked Bond Principles, the financial or structural characteristics of a bond can change depending on whether predefined sustainability targets are achieved. Coupon adjustments are the most common example.
So the missing concept is not measurement. It is the connection between measured methane performance and the economics of the financing.
The Bottom Line
The labelled debt market has not ignored methane. The framework has evolved, and transition bonds now provide a much clearer route for financing methane and flaring abatement at existing oil and gas assets.
The remaining question is what happens after eligibility.
A use-of-proceeds structure can prove that capital went toward methane reduction and report what the project achieved. The next step is determining whether verified performance itself can become part of what the investor is financing.
Seven trillion dollars of sustainable debt shows that the capital exists.
The opportunity is to make the tonne, not just the expenditure, financeable.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Entoro, LLC, or any of their respective affiliates. This article is provided for general informational and educational purposes only and does not constitute investment advice, a recommendation, an offer to sell, or a solicitation of an offer to buy any security, financial product, or investment strategy. The information presented is believed to be reliable but is not guaranteed as to its accuracy, completeness, or timeliness. Any forward-looking statements or opinions are subject to change without notice.
Author Bio: Thomas P. Fuglesang is a Managing Director at Entoro Capital, LLC and Capturiant, LLC, with over 25 years of experience in energy, shipping, commodities, and real estate. He specializes in corporate finance, investment banking, private wealth management, and equity sales, with deep expertise in structuring transactions and developing international capital market solutions. At Entoro and Capturiant, he leads structuring, capital markets advisory, and business development for environmental and alternative investment products.
Previously, Thomas spent over 17 years as Managing Director at Absalon Capital Ltd, overseeing projects in oil services, shipping, and commodities, while holding multiple senior roles including Board Director and CFO. Earlier in his career, he held roles at Morgan Stanley (Private Wealth Management and Associate in Luxembourg), Credit Suisse (Investment Banking, Transportation/Shipping), and Pareto Securities (Equity Sales).
Thomas has extensive capital markets experience in capital raising, M&A, governance, advisory, and execution of large-scale international transactions. His leadership roles have included Board Director at CAPOL and Ascot Energy Services, CFO of Newport Shipping LLP, and Director at Ohlsson International Ltd and SeaHold Group.
He holds CFA Level I, the Investment Administration Qualification, and Capital Markets & Securities Analyst certification. His academic background includes an MSc in Shipping, Trade & Finance from Bayes Business School (London), and a BA in Business Economics from Vrije Universiteit Brussel (Belgium) and Augsburg University (Minneapolis).
Thomas is recognized for bridging traditional and emerging sectors and structuring innovative solutions for corporate and institutional clients globally.
