A fierce battle over methane emission regulations
In a bid to combat climate change and simplify energy rules, Eurogas and three other industry associations have called for the regulation of methane emissions to be included in the upcoming "energy omnibus," a comprehensive set of energy rules known as the "Energy Omnibus Regulation." This move comes as the European Commission seeks to address the issue with a high level of priority.
The regulation, which was negotiated with environmental, social, and governance (ESG) issues at the forefront, will be implemented in a phased approach. EU domestic producers will be required to implement mitigation measures by 2026 and start submitting measurement-based reports on their methane emissions. By 2027, importers will follow suit.
High methane leaks often indicate broader operational risks for oil and gas producers, making the regulation particularly important. The EU regulation on methane emissions also has implications for asset managers and financial service providers, as they currently disclose CO2 emissions of their borrowers and investees but do not report on methane.
To effectively support the European Commission's efforts, a common framework for assessing corporate performance is vital. This is crucial for ESG reporting and reducing methane emissions. In line with this, Eurogas has created a new position of methane policy advisor to monitor regulation, draft position papers, and represent Eurogas in meetings with political decision-makers and interest groups.
Environmental associations have also joined the call, collecting signatures from banks and asset managers, urging the EU Commission, Parliament, and member states to adhere to the core provisions of the EU methane emissions regulation. Investors and bank lenders can play a crucial role in enforcing the regulation's goals and strengthening acceptance among member states.
The situation is complicated by the fact that the United States has become the largest supplier of liquefied natural gas to the EU. This presents a challenge as the US is pushing for EU regulations that accommodate American gas producers.
The EU's new methane emissions regulation, which was adopted last year, sets out requirements for quantification, monitoring, and reporting for operators of oil and gas facilities and importers. The regulation considers methane crucial in combating climate change because it warms the climate much more than CO2 but remains in the atmosphere for a much shorter period.
As the oil and gas industry follows the technical standards of the EU regulation on methane emissions, the focus now shifts towards enforcing the regulation and ensuring compliance. The European oil and gas industry is actively lobbying for further specification of the EU methane regulation through regulatory technical standards.
In a shift towards competitiveness, since the start of the second Commission led by Ursula von der Leyen, the EU Commission now also attaches high importance to the competitiveness of the European industry. This is a promising sign for the future of the EU's efforts to reduce methane emissions and combat climate change.
