From 1 January 2027, the part of the Methane Regulation concerning the monitoring of emissions is due to come into force in the EU. However, due to the uncertainty surrounding fossil fuel supplies, highlighted by the war in the Middle East, Europe is trying to ‘smooth things over’ so as not to undermine the bloc’s energy security. Consequently, on 20 July, the European Commission put forward recommendations on compliance and the imposition of fines.
The European Commission maintains that the Methane Regulation is a vital tool for tackling emissions of this greenhouse gas. However, its proposals appear to represent a relaxation of the rules.
Proof of emissions compliance
The first recommendation concerns how importers and suppliers can demonstrate to national authorities that they are complying with the provisions of the regulation. There is no requirement to track the physical movement of methane, and the proposal sets out various solutions that can be combined. These include ‘certification’ and ‘tracking and reporting’. These are best suited to countries with complex supply chains and are already in use in the US.
Deferral of fines
At the same time, a highly contentious recommendation concerns fines for non-compliance with the ‘methane’ regulation. The European Commission proposes suspending their application for three years – from 2027 to 2029 inclusive. In this way, the EU’s executive branch aims to avoid threats to security of supply and also cites uncertainty for importers. This uncertainty allegedly stems from the fact that most countries have not yet introduced penalty schemes, meaning companies are unable to assess the risks.
Despite this, the European Commission maintains that its recommendations will facilitate the implementation of the regulation, and that postponing the fines does not mean that the methane requirements can be ignored. The EU is fairly optimistic that, even without financial risks, “companies will continue to make every effort to achieve compliance”.
The industry remains dissatisfied
Oil and gas companies had previously stated that it would be impossible to comply with the regulation’s requirements by 2027. However, the European Commission refused to amend the legislation itself, instead granting suppliers a ‘grace period’ by deferring the fines.
According to Politico, the EU authorities are convinced that the windfall profits oil and gas companies are making in the EU market will not allow them to cut imports solely because of methane restrictions.
“People will come to their senses over the summer. These guidelines will explain more clearly how and when to comply, and it will become clearer that most importers can and will comply with the requirements, rather than losing sales in the liquid global gas market,” a European official told journalists on condition of anonymity.
The figures speak for themselves. According to the Jacques Delors Institute, in just 100 days of the war in Iran, the EU paid an additional €62 billion for energy supplies.
Ecopolitic previously reported that oil and gas giants and the U.S. government attempted to exert pressure on the EU to postpone or weaken the rules on reducing methane emissions.
Later, five EU member states called on the European Commission to postpone the implementation of methane emission intensity rules for two years. This part of the regulation is to take effect starting in 2030.
