Preparing for New EU Regulations on Methane Emissions

The European Commission has been working on a new set of rules on methane reduction in the energy sector. The proposal is expected to introduce new requirements on measurement, reporting and verification of methane emissions, restrictions on flaring and venting, and an increase in transparency on methane emissions associated with fossil fuel imports.

How can European oil and gas operators prepare for the new legislation?

Ahead of our Methane Mitigation Summit – Europe, we spoke to Andris Piebalgs, Professor at the European University Institute and former European Energy Commissioner, about what the proposals will mean and where they stand today.

Piebalgs will be chairing the Methane Mitigation Summit – Europe, taking place 27-29 March in Amsterdam.

Diana Davis, IX Network:  I understand that the EU Commission is set to release new proposals on methane emissions reduction. Can you tell me more about where these proposals stand and the background to them?

Andris Piebalgs, Professor at EUI: There is no binding regulation at this stage. Methane emissions are addressed in different legislative pieces in the Member States. However, the EU now has the binding goal to be climate neutral by 2050. Methane emissions are covered by this pledge.

We understand that even with all the other disasters that we have around us, the climate crisis is the most serious one. I’m not neglecting Russia's aggression toward Ukraine, but if we evaluate it based on the potential impact on humanity, the climate crisis is the existential crisis.

That means that we need to try to achieve reductions quickly. The EU has a particular role to play. While our energy sector accounts for only 19% of methane emissions (the majority come from agriculture and waste), we import a lot of fossil fuels, and these emissions don’t show up in our accounting.

In reality, we have leverage as a consumer and a responsibility to mitigate climate change. Methane emissions reduction is perhaps the most efficient tool to come to 1.5 degrees trajectory.  If you reduce methane emissions, you'll quickly reduce the impact of global warming. CO2 measures are important too, of course, but they take longer to see the effects; we need to reduce both in tandem.

Taking this into account, the European Commission has come up with a proposal to address methane emissions in the energy sector. This sector has the best research on methane emissions. There are readily available technologies and many companies in the industry have voluntarily committed to methane reductions. That’s why the EU has decided to start in that industry; it is a low hanging fruit.

In the future, there may be additional actions in agriculture and waste to reduce methane emissions. But the energy sector is the easiest place to start.

Diana Davis, IX Network: What specifically are the proposals seeking to address?

Andris Piebalgs, Professor at EUI: The first step is addressing emissions measurement, reporting, and verification. In a lot of EU member countries, the reporting is based on generic factors. Those give a general indication of methane emissions, but research shows that methane emissions are generally higher than the current system accounts for. 

Reporting is crucial, as is ensuring that reports are verified to industry OGMP 2.0 standards. Companies need to be very much aware of what they are emitting.

This Measurement-Reporting-Verification (MRV) pillar is supported by the Leak Detection and Repair (LDAR) pillar. This is where you address methane emissions by following the leaks, understanding emissions by equipment, and applying new technology.

This applies to the import of oil and gas too, but at this stage you just need to report how you measure and what you measure. In the next steps, there may also be some premium or penalties if the imports do not follow the standards on methane emissions.

Diana Davis, IX Network: Interesting. So that would potentially make fossil fuel imports more expensive?

Andris Piebalgs, Professor at EUI: At this stage it’s just reporting. We need transparency. 

There is still some fine tuning going on while we wait for the European Parliament to come with the final report. I don't expect major changes: some measures will likely be strengthened, some measures will likely be weakened, but that is always the way in the European legislation process.

Industry lobbyists in some member countries are trying ease the pressure on companies to invest in some measures. Sometimes the companies are right, but sometimes they are too pessimistic in terms of what they can achieve. I would mention that we can look at Norway as an example where companies are already doing this quite well and it demonstrates that industry can deliver these measures.

I believe that the regulation will be adopted this year and will come into effect by the end of the year.

Diana Davis, IX Network: Why add red tape to the industry at a time when energy security and cost of living are so important?