LNG, Natural Gas, Energy Transition, Emissions

March 04, 2025

EU methane emissions regulation poses gas supply security challenge: Eurogas

Getting your Trinity Audio player ready...

HIGHLIGHTS

Regulation came into effect in August 2024

'Major' concerns expressed by several EU suppliers

Eurogas calls for guidance, targeted adjustments

Elements of the EU's new methane emissions regulation pose "significant" challenges to the EU's gas supply security, particularly as the EU seeks to replace Russian gas imports by 2027, industry group Eurogas said March 3.

In a position paper, Eurogas said that to ensure energy security and affordability -- while also supporting diversification objectives -- clarifications, guidance and targeted adjustments to the regulation were necessary.

"These should be implemented while aiming to avoid unnecessarily undermining the environmental ambition of the regulation," Eurogas said.

The EU Regulation on methane emissions reduction in the energy sector was formally adopted in May 2024 and came into effect the following August. It aims to reduce energy sector methane emissions both in Europe and in global supply chains and includes a methane transparency requirement on imports.

Eurogas said "major" concerns had been expressed by several of the EU's suppliers regarding the regulation.

It said the US Department of Energy and the Environmental Protection Agency had recently asked the European Commission to initiate a dialogue on regulatory equivalence under the regulation.

Talks are set to take place soon between US LNG industry representatives and European policymakers to discuss the EU's methane emissions import rules.

"As Europe seeks to replace Russian gas imports by 2027, including with increased LNG imports from the US, there is an urgent need for clearer and more pragmatic methane rules," Eurogas said in a statement March 4.

"Eurogas welcomes greater engagement between the EC and US industry on this critical issue," it said.

The talks, it said, represented an opportunity to explore how regulations could be adjusted to achieve a "secure, affordable and diversified market."

'Critical and volatile'

Eurogas secretary general Andreas Guth said March 4 that the EU-US engagement came at a "critical and volatile" time for the energy market.

"We hope any talks will be used to resolve concerns around the timeline, uncertainties, and broader impact of the EU's methane regulation," Guth said, notably on security of supply.

"We look forward to continuing to work with industry and policymakers on this to increase the flexibility and strengthen the security of the EU's gas supply," he said.

According to Eurogas, the US bodies said this would be essential to ensure a "continued, reliable and stable supply of gas to Europe."

"This, at a time when the European Commission called for US LNG to replace Russian imports," Eurogas said.

Eurogas President Cristian Signoretto said in July in an interview with Platts, part of S&P Global Commodity Insights, that it was "crucial" for its members to understand what needs to be done to be able to continue importing gas into Europe.

"We also need to make sure that we engage with the producing countries," Signoretto said, citing global LNG exporters and pipeline gas suppliers in North Africa as examples.

In its position paper published March 3, Eurogas said the regulation was an "important step" in aligning climate ambitions with global energy trade.

The industry group said it fully supported the regulation's overarching goals of reducing methane emissions and ensuring sustainable energy imports.

"However, the regulation's timeline, uncertainties and extraterritorial implications create significant challenges for the flexibility and security of the EU's gas supply," Eurogas said.

Supply contracts

Eurogas said the regulation was already preventing certain gas supply contracts from being signed.

"Uncertainties regarding compliance with requirements yet to be defined, liability risks and potential penalties make it difficult for parties to assess risks and move forward with agreements," it said.

"For example, parties negotiating import contracts today are required to comply with methane intensity calculation methodologies that are still to be specified by secondary legislation."

Eurogas added that the regulation restricted the pool of available suppliers on top of limiting access to long-term contracts for EU importers.

"By complicating access to (long-)term contracts, the regulation could disincentivize EU importing activities toward greater reliance on gas procurement within the EU gas system e.g., in the spot market," it said.

Eurogas also said regions were competing on a global market for a finite supply.

"The added uncertainty and liability risk from the regulation may give third-country markets with fewer restrictions a competitive edge, further complicating the EU's diversification efforts."

Eurogas also said that considering the EU's reliance on gas imports, it would be "key" for EU institutions to have a close dialogue with exporting countries to identify solutions to key challenges resulting from EU legislation.

Eurogas said it recommended adopting a "pragmatic" approach regarding regulatory equivalence to ensure compliance can be ensured rapidly to not endanger security of supply and avoid distortion between supply routes.

"It is critical to underline that non-EU third-producing countries and companies do not find themselves liable to implement these measures, which puts EU players at a disadvantage compared to other global players," Eurogas said.

"Thus, the requirements could soon have an impact on producing assets straddling different regional markets."


Editor: