EU Legislation Pressures Foreign Oil and Gas Producers to Reduce Methane Emissions
This legislation puts pressure on international suppliers to take measures to reduce leaks of methane, a potent greenhouse gas. Methane is the second-largest contributor to climate change after carbon dioxide, and its short-term warming effect is more significant.
The move to swiftly reduce methane emissions in the coming decade is seen as crucial to preventing severe climate change.
Following extensive negotiations that lasted through the night, representatives from European Union (EU) member states and the European Parliament have reached an agreement. As a result, they have decided to impose “maximum methane intensity values” by the year 2030 on producers outside the EU who export fossil fuels into Europe.
This move is part of a concerted effort to regulate and reduce methane emissions associated with imported fossil fuels.
The regulation of methane emissions is crucial as the process of extracting and transporting oil and gas can lead to the release of methane into the atmosphere. While burning oil and gas results in carbon dioxide emissions, the extraction and transportation processes are associated with methane leakage, which is a potent greenhouse gas.
The newly introduced import rules targeting methane emissions are expected to impact major gas suppliers, including the United States, Algeria, and Russia. Moscow, in particular, reduced gas deliveries to Europe in the previous year. Norway has since replaced Russia as Europe’s primary pipeline gas supplier, with one of the world’s lowest methane intensity levels in its supply.
“Finally, the EU tackles the second most important greenhouse gas with ambitious measures,” said Jutta Paulus, the EU Parliament’s co-lead negotiator, adding that the law “will have repercussions worldwide”.
Importers will face financial penalties if they purchase from foreign suppliers that fail to comply with the methane intensity limits, essentially imposing fees on non-compliant fuels, according to Paulus, one of the negotiators. The methane standard will be mandatory for supply contracts signed after the law takes effect, expected later this year, pending final approval from the European Parliament and EU countries.
The International Association of Oil & Gas Producers expressed support for a proportionate, efficient, and implementable EU Methane Regulation but noted the need for clarification on several aspects of the legislation.
The specific methane emissions limit for the EU will be outlined by the European Commission before its application. The Environmental Defense Fund Europe highlighted that these measures send a clear signal about climate responsibilities transcending national borders, particularly in the lead-up to the international climate talks at COP 28 in the United Arab Emirates.
“As the world’s biggest buyer of natural gas, the EU is strategically leveraging its economic influence to drive global reductions in methane emissions,” Flavia Sollazzo, Senior Director, EU Energy Transition at EDF Europe said.
Methane emissions often occur due to leaks from pipelines and infrastructure at oil and gas fields. The new regulation not only sets methane intensity limits but also imposes additional requirements on the oil, gas, and coal sectors. These requirements involve the measurement, reporting, and verification of methane emissions.
As part of the deal, oil and gas producers in Europe are now obligated to regularly inspect for and address leaks of methane in their operations. Furthermore, the regulation introduces restrictions on most instances of flaring and venting, where companies intentionally burn off or release unwanted methane into the atmosphere. These restrictions are set to take effect in 2025 or 2027, depending on the type of infrastructure involved.
