Illustration; Source: Environmental Defense Fund Europe (EDFE)

First-ever EU law to rein in methane footprint comes with crackdown on emissions from imports

As COP28 draws near, the European Union (EU) has taken steps to tackle methane emissions from the energy sector, with the European Parliament, Commission, and Council reaching a provisional agreement on the first EU-wide legislation to cut the methane footprint in Europe and its global supply chains. This shows the EU’s willingness to shoulder significant responsibility for methane emissions beyond its borders.

Illustration; Source: Environmental Defense Fund Europe (EDFE)

The EU’s methane regulation for the energy sector was proposed in December 2021 as part of the proposals to deliver the European Green Deal. Following the EU Parliament’s adoption of a position on a new law to reduce methane emissions from the energy sector with 499 votes in favor, 73 against, and 55 abstentions, the Parliament was ready to start negotiations with the EU Council on the final text of the legislation.

To this end, the representatives from the European Parliament, the Council of the EU, and the European Commission were scheduled to meet on Tuesday, November 14, to hammer out a compromise agreement on the European Commission’s proposed regulation. The new law, which is seen as the first piece of EU legislation aimed at curbing methane emissions, covers direct methane emissions from oilgascoal, and biomethane once injected into the gas network.

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Since methane is a powerful greenhouse gas and the second biggest contributor to climate change after carbon dioxide (CO2), the agreement that has now been reached is perceived to be crucial to delivering the European Green Deal and reducing net greenhouse gas emissions by at least 55% by 2030. This new legislation will oblige the fossil fuel industry to properly measure, monitor, report, and verify methane emissions according to the highest monitoring standards, and take action to reduce them.

Maroš Šefčovič, Executive Vice-President for European Green deal, Interinstitutional Relations and Foresight, commented: “Tackling methane emissions is a win-win policy. It is good for our planet and good for consumers. I look forward to working with the European and international energy industry to ensure that these rules are quickly and effectively implemented.”

The agreement, which comes just a few weeks ahead of COP28 where the EU will continue its engagement with international partners on reducing methane emissions, aims to stop the avoidable release of methane into the atmosphere and minimize leaks of methane by fossil energy companies operating in the EU.

The EU’s methane legislation is expected to enter into force in early 2024. Prior to this, the provisional agreement requires formal adoption by both the European Parliament and the Council. Once this process is completed, the new legislation will be published in the Official Journal of the Union and come into force.

Kadri Simson, Commissioner for Energy, remarked: “This landmark agreement will allow us to seriously tackle the energy sector’s greenhouse gas emissions in the EU and beyond. This first-of-its-kind regulation enables the EU to curb methane emissions in a cost-effective manner, and address venting and flaring of gas, which make economically and environmentally little sense. This will benefit our planet and will also avoid wasted resources in tight global gas markets.”

What does this mean for oil & gas players?

The EU’s new methane regulation requires operators to report regularly to the competent authorities about quantification and measurements of methane emissions at the source level, including non-operated assets. The legislation also obliges oil and gas companies to carry out regular surveys of their equipment to detect and repair methane leaks on the EU territory within specific deadlines.

This law bans routine venting and flaring by the oil and gas sectors and restricts non-routine venting and flaring to unavoidable circumstances, such as for safety reasons or in case of equipment malfunction. The methane regulation limits venting from thermal coal mines from 2027, with stricter conditions kicking in after 2031.

In addition, the new law requires companies in the oil, gas, and coal sectors to carry out an inventory of closed, inactive, plugged, and abandoned assets – such as wells and mines – to monitor their emissions and adopt a plan to mitigate these emissions as soon as possible.

How will this affect oil & gas imports?

With energy imports making up over 80% of the oil and gas consumed, the EU is said to be the largest global importer of natural gas but it also imports a large share of the oil and coal it consumes. Bearing this in mind, the new methane regulation will also tackle the methane emissions related to these imports by establishing a methane transparency database where data on methane emissions, reported by importers and EU operators, will be made available to the public. The law requires the Commission to establish methane performance profiles of countries and companies to allow importers to make informed choices on their energy imports.

Moreover, the Commission will put in place a global methane emitters monitoring tool and a rapid alert mechanism for super-emitting events, with information on the magnitude, recurrence, and location of high methane-emitting sources both within and outside the EU. As part of this tool, the Commission will be able to request prompt information on action to address these leaks by the countries concerned.

Come January 2027, the methane regulation will require that new import contracts for oil, gas, and coal can only be concluded if the same monitoring, reporting, and verification obligations valid for EU producers are applied by exporters. The regulation will set out a methane intensity methodology and maximum levels to be met for new fossil fuel contracts.

According to the European Commission, the new transparency obligations on international partners will inform the EU’s bilateral and multilateral dialogues with global energy partners. Over 150 countries have committed to slashing their methane emissions by signing up for the Global Methane Pledge with the aim of reducing methane emissions by 30% by 2030, thus, this tool is expected to help the EU to work with partners to achieve methane reduction goals.

Wopke Hoekstra, Commissioner for Climate Action, stated: “As we head to COP28, it is great news that the EU has one more law to demonstrate to our international partners that we are delivering on our climate targets. Methane is the second most significant greenhouse gas, after carbon dioxide, and it plays an important role in global warming. We now have the tools to reduce it more quickly and continue our work towards becoming the first climate-neutral continent by 2050.”

New EU methane regulation seen as ‘groundbreaking’

The Environmental Defense Fund Europe (EDFE) – a non-governmental organization (NGO) looking for ways to clean the air, decarbonize shipping, and reduce methane pollution – believes that the European Union’s new legislation, which it deems “a momentous climate decision,” will clamp down on methane emissions from energy imports, as it aims to curtail these emissions within and far beyond the EU’s borders by setting strict new curbs on emissions from fossil fuel operations across the bloc’s 27 member states and applying tough standards to many oil, coal and natural gas exporters that supply to the EU.

Helen Spence Jackson, Executive Director, at EDF Europe, pointed out: “Methane is an incredibly potent greenhouse gas in the near term. Cutting emissions swiftly and dramatically is critical to slowing the devastating impacts of climate change. The EU is raising ambitions not just through words, but through action that will help protect future generations.” 

Furthermore, EDFE highlights that incoming regulations, specifically targeting methane emissions from imported oil and gas, are estimated to drive two to six times greater emissions reductions compared to regulations covering all domestic EU emissions from energy, including coal. The NGO believes that this decrease is achievable because the EU’s methane footprint related to oil and gas imports is three to eight times that of its domestic oil and gas supply chain.

Therefore, EDFE is convinced that setting stringent standards for imported oil and gas will enable the EU’s regulations to lead to major global methane emissions reductions that go far beyond what could be achieved through domestic actions alone. With energy security concerns still ongoing, curbing methane emissions for this NGO is also a matter of energy security, as abating methane emissions will help ensure available supplies are not wasted, especially during winter heating seasons in Europe.

Flavia Sollazzo, Senior Director of EU Energy Transition at Environmental Defense Fund Europe (EDF Europe), emphasized: “This is a very clear message from the EU and particularly ahead of COP28 – that climate responsibility doesn’t stop at its borders. And that as the world’s largest buyer of natural gas, it is prepared to use its influence to help drive global methane emission reduction.

“The oil and gas industry should see this moment as an opportunity and use its resources to find solutions for curbing emissions. Reducing leaks quickly pays for itself by preventing waste – good from an economic and energy security perspective. This is a defining moment for the EU and helps give our planet a fighting chance.”