Struggling U.S. Methane Exporters Face European Union Regulatory Challenges

In a significant move, the EU Commission President and the US President recently signed a groundbreaking trade agreement in Scotland, marking a new chapter in transatlantic relations. This agreement, however, extends beyond trade, as both parties are now focusing on reducing methane emissions in the oil and gas sector.

The EU Commissioner for Energy and Housing, Dan Jorgensen, has visited the US for discussions regarding this matter. The EU's concern lies in the fact that some US states do not have bans on flaring, a common practice during oil drilling that contributes to methane emissions.

To tackle this issue, the EU Commission has launched infringement proceedings against nine member states for failing to designate the authorities responsible for enforcing the new rules. Meanwhile, the US market, comprising hundreds of small companies, many of which engage in fracking, poses a challenge in terms of data collection and regulation.

In an effort to address this, the EU is currently developing regulatory technical standards for its methane emissions regulation. Lobbyists on both sides confirm that the process of developing these technical standards will be complex.

One potential solution could be the evaluation of methane intensity at the LNG plant catchment area level, which could serve as a substitute for data from individual gas companies. This approach could help in overcoming the challenges posed by the vast number of players in the US market.

The US has become the largest gas supplier to the EU, with liquefied natural gas (LNG) being a key component of the trade agreement between the two. However, private gas producers in the US are opposed to strict reporting requirements and potential restrictions on EU imports of high-emission gas.

Banks and EU fund managers face limited data on individual US fracking companies, another hurdle in the process of regulating methane emissions. To bridge this gap, informal meetings between EU Commission officials and representatives of the US LNG industry and government have already taken place.

Despite ongoing negotiations, no specific information about the US government's stance on the EU methane emissions regulation has been provided. There are also challenges in precisely attributing gas leaks, making the process of setting standards and enforcing them even more complex.

In conclusion, the EU and US are working together to address methane emissions in the oil and gas sector, a crucial step towards reducing greenhouse gas emissions and mitigating climate change. The process is complex, but with continued dialogue and cooperation, both parties aim to establish clear and effective standards for methane emissions regulation.