EU eases methane law compliance for oil, gas imports, potentially boosting US gas

The European Union plans to ease compliance for companies under its methane emissions law on oil and gas imports. 

This change could boost US gas exports to the EU, following pressure from the Trump administration for an amendment to the policy.

Starting this year, the European Union has implemented a significant regulatory change targeting methane emissions from imported oil and gas. 

The new requirement mandates that companies importing these fossil fuels into Europe must actively monitor and report the associated methane emissions. 

This measure is part of the EU's broader climate strategy to curb the release of methane, a potent greenhouse gas with a much higher warming potential than carbon dioxide over the short term. 

By making importers accountable for the emissions footprint of their supply chains, the EU aims to incentivise global producers to adopt better practices for detecting and reducing methane leaks, ultimately contributing to international climate goals.

Background and US concerns over new law

US Energy Secretary Chris Wright has voiced opposition to the world-first climate policy, labeling it as impossible to implement. 

Wright also issued a warning that the policy could potentially disrupt the flow of US gas supplies to Europe.

The European Commission is reportedly proposing two simplified methods for EU member states to comply with regulations, particularly for natural gas shipments where the source is difficult to track. 

This complexity, the Commission stated in a document shared with member governments, is relevant for cases like US liquefied natural gas (LNG), where a single cargo may contain fuel from various, commingled gas fields, according to a Reuters report.

The Commission document said:

Alternatively, companies could meet compliance requirements by purchasing certificates from an independent third-party verifier. 

This verifier would be responsible for calculating and assigning an emissions value to the imported gas based on its production site.

Additionally, the "trace and claim" approach can be employed, according to the report. 

This method involves assigning a digital ID to specific fuel volumes.

EU methane rules tighten

This digital ID is then included in all sales and purchase agreements as the oil or gas progresses through the entire value chain, from the initial producer all the way to the eventual final buyer.

The fundamental requirements of the methane law remain unchanged, although they will progressively intensify. 

Notably, starting in 2027, all new gas supply contracts will mandate compliance with methane regulations that are equivalent to those established by the EU.

US exporters warned of compliance difficulties with the law, citing the fragmented American gas industry as the reason they are unable to track methane emissions throughout their value chains.

National authorities within EU governments are tasked with enforcing the new methane law. 

The European Commission has requested confirmation from these authorities regarding the specific compliance rules they intend to accept. 

The matter is scheduled for discussion by the countries' energy ministers in Brussels on Monday.