US LNG exporters eye solutions for EU buyers amid EPA 'headwinds'

The US LNG sector will craft solutions for European buyers facing stricter requirements for methane reporting just as the US considers relaxing its own rules, the leader of an LNG trade group said March 28.

"Constructive solutions can be found" that will not restrict US LNG exports to Europe while the US Environmental Protection Agency reconsiders the federal Clean Air Act's greenhouse gas reporting program, said Fred Hutchison, president and CEO of LNG Allies.

After meeting with European natural gas companies and US and EU government officials, Hutchison said EU leaders heard a clear message that the methane regulations set to have compliance start in 2027 are not a good fit for US LNG exporters. The EU rules require collection of methane data to the level of the producer, while the US gas industry does not provide a clear compilation of emission data in great detail at that level, Hutchison said in a brief phone call from Croatia.

The ability of US companies to trace the GHG emission footprint of gas production could further be hindered by the EPA's March 12 announcement that it is reconsidering subpart W of the agency's GHG reporting program.

That can present "headwinds" for US companies that want to sell gas to European buyers, said two authors of a recent statement on LNG market dynamics. US LNG exporters and EU leaders have an interest in avoiding a "zero-sum showdown, but it remains unclear how they will navigate this unfamiliar energy landscape where, at least politically, the US and EU are moving further apart," wrote Gautam Jain, a senior research scholar at Columbia University's Center on Global Energy Policy, and Tim Boersma, a consultant and a fellow at the center.

"It will likely come down to the industry itself to make progress, possibly in close collaboration with lawmakers and regulators in jurisdictions like the EU," Jain and Boersma wrote in a March 27 commentary.

Hutchison has been engaged in such collaboration, with "lots of discussion" about the EU rules and steps US companies are taking, he said. The meetings over the past week included EU representatives, gas company leaders and Laura Lochman, acting assistant secretary at the US State Department's Bureau of Energy Resources, Hutchison said.

While there may be concern about the EPA's actions, "the US industry isn't walking away from its methane commitments," Hutchison said. "The world wants our product, and the world wants our product to be as clean as possible."

Third-party certification of the GHG emission footprint associated with US gas production is an avenue that is worth exploring to try to meet EU regulations, Hutchison said.

Roughly one-third of US gas production has methane levels certified by third-party companies such as MiQ, Hutchison pointed out.

The largest LNG exporter in the US, Cheniere Energy, provides GHG emissions data tied to each LNG cargo that it sells to customers globally, but it is the only US exporter doing so, and it has faced difficulty tracing the data to individual producers as called for by the EU regulations, Hutchison said.

Because compliance with the EU rules does not start until 2027, there are lots of approaches that can be examined to help US companies meet EU buyers' needs, Hutchison said.

"I'm convinced we'll reach some solutions," he said.