Biden officials seek to align regulations on US LNG with European methane rules

Biden administration officials have asked the European Commission to ensure imports of LNG that meet US regulations on methane emissions will satisfy new European standards for imported fuels, according to a letter obtained by S&P Global Commodity Insights.

The letter was dated Oct. 28 -- a week before president-elect Donald Trump won a second term, having promised a deregulatory agenda that is expected to include a rollback or loosening of US methane standards. Even against that backdrop, how US LNG will align with a stronger European stance on addressing methane emissions remains an import question for the gas sector as the recently enacted EU Methane Regulation increases pressure on suppliers to better track and control emissions of the powerful greenhouse gas.

"We understand that this process will take time," the US officials wrote. "However, we would like to begin discussions as soon as possible, to ensure the continued reliable and stable supply of natural gas from the United States to Europe."

The letter, first reported by Reuters, was signed by Brad Crabtree, who heads the US Department of Energy's fossil energy office, and by Joseph Goffman, who is over the US Environmental Protection Agency's air office. It was addressed to the European Commission's director general for energy, Ditte Juul Jorgensen.

The US is the world's top exporter of LNG and it has been a critical supplier to Europe following the loss of most Russian pipeline gas three years ago.

An EPA spokesperson declined to comment. Spokespeople for the DOE and the European Commission did not immediately respond to messages seeking comment.

The letter touted a series of methane measures that officials described as a "strong complement" to the long-anticipated EU regulation, which entered force in August.

The measures include a new fee on methane emissions from oil and gas operations established under the Inflation Reduction Act of 2022 to encourage cutting emissions. The EPA rolled out a final rule on the fee Nov. 12, but efforts are expected under the next Congress to do away with the fee, which is opposed by the leading oil and gas trade group the American Petroleum Institute.

Many details about how the EU methane rules will work have yet to be developed, with a key compliance period starting in 2027. Reporting requirements start in May 2025 that are expected to establish an emissions baseline. By 2030, there will be a methane emissions intensity standard that imported supplies are expected to meet.

But the US sector in particular faces major reporting and compliance uncertainties under the new measures because of the nature of the US gas system. A clear hurdle is a requirement to collect data on emissions of imported fuels "at the level of the producer" because US LNG exporters sourcing feedgas from the vast US pipeline grid lack a clear line of site to the wellhead.

The EU law does allow for regulatory exemptions if supply countries can show their LNG is subject to requirements at least as stringent as the EU rules. European officials have yet to detail how that process will work, and the recent letter from the US officials amounted to a request to engage with the European Commission as it takes the next steps to develop it.

"Government to government interaction on this topic in particular is going to be really important," Charlie Riedl, executive director for the Washington, DC-based trade group the Center for Liquefied Natural Gas, said in an interview.

Biden administration officials in the letter expressed confidence that the "the United States' extensive domestic regulatory regime to monitor, measure and reduce greenhouse gas emissions (especially methane) from the oil and gas sector is consistent with the goals of the EU's regulations."

The biggest US LNG producer, Cheniere, supports the EU methane rule, Chief Commercial Officer Anatol Feygin said during a Nov. 12 webinar hosted by investor Tortoise Capital. The exporter also supports the Paris Agreement on climate change, which the second Trump administration is expected to withdraw from.

Cheniere, which has launched a series of efforts over the past several years to better track and control emissions along its supply chain, wants a "disciplined industry that has good actors that continue to drive down the emissions profile of our product," Feygin said. Recent steps by Cheniere include setting a methane emissions intensity target for its two LNG export plants and publishing a lifecycle assessment study of emissions across its supply chain in a peer-reviewed scientific journal.

"This is one of the key ways that we extend the runway for many, many decades for this product," Feygin said.