European Parliament and Council reach deal to cut methane emissions in energy sector

On 15 November 2023, the European Parliament and Council reached a political agreement on a Regulation that establishes a new EU legal framework for the measurement, reporting, and verification of methane emissions in the energy sector. The Regulation also introduces mitigation measures to prevent such emissions, including detecting and repairing methane leaks and limiting venting and flaring. It sets out global monitoring tools to ensure transparency on methane emissions from imports of oil, gas and coal into the EU.  

Methane is responsible for around 30% of the rise in global temperatures since the industrial revolution, according to the International Energy Agency (IEA). Reductions in methane emissions are key to limiting global warming. In October 2020, the EU adopted a Methane Strategy that focused on reducing emissions in the energy, agriculture, and waste sectors, which account for almost all human-related methane emissions. On 15 December 2021, the Commission published the Proposal for a Regulation to reduce methane emissions in the energy sector as part of the second suite of its “Fit for 55” package (see our previous blog post).  

During COP26 in 2021, the EU and US launched the Global Methane Pledge to reduce methane emissions by 30% by 2030. Since then, over 150 countries have signed up to this pledge representing 80% of the global economy. China and the US had already announced their own plans to tackle methane emissions, and EU co-legislators wanted to be able to present specific EU actions at COP28 starting on 30 November 2023.

The text agreed by the co-legislators is not publicly available yet. According to the Council and Commission press releases, the agreement was reached on the following terms: 

• The Council and the Parliament have agreed on specific deadlines and frequencies for monitoring, reporting and inspections of potential sources of methane emissions. The measurement and reporting are based on the Oil and Gas Methane Partnership 2.0 framework and will help understand the exact locations and volumes of methane emitted, allowing a shift from estimates to direct measurements of methane emissions, checked by independent verifiers.
• Oil and gas companies will be obliged to carry out regular surveys of their equipment to detect and repair methane leaks on EU territory within specific deadlines. The provisional agreement distinguishes between type 1 leak detection and repair surveys (lower accuracy to find big leaks) and type 2 surveys (higher accuracy to find small leaks) based on minimum detection limits and minimum leak thresholds. 
• The Regulation prohibits routine venting and flaring by the oil and gas sectors and restricts non-routine venting and flaring to unavoidable circumstances, such as safety reasons or equipment malfunction. It limits venting from thermal coal mines from 2027, with stricter conditions kicking in after 2031;
• Companies in the oil, gas and coal sectors must carry out an inventory of closed, inactive, plugged and abandoned assets, such as wells and mines, to monitor their emissions and adopt a plan to mitigate these emissions as soon as possible. The provisional agreement provides that Member States should maintain and regularly update an inventory of all wells. Proof of no methane emissions should be produced for wells permanently plugged and abandoned less than 30 years ago and, where available, for other wells. The Regulation also applies to mines that have been closed or abandoned for less than 70 years, with an exemption for mines that have been fully flooded for more than 10 years.
• This Regulation will also tackle the methane emissions related to imports. The Council and the Parliament agreed on three implementation phases: 

(i) The first phase will focus on data collection. In particular, a methane transparency database will be created where data on methane emissions reported by importers and EU operators will be made available to the public. The Commission must establish methane performance profiles of countries and companies. 

The Commission will also put in place a global methane emitters monitoring tool and a rapid alert mechanism for super-emitting events both within and outside the EU. As part of this tool, the Commission will be able to request information on action to address these leaks by the countries concerned;

(ii) In the second and third phases, equivalent monitoring, reporting and verification measures should be applied by exporters to the EU. As of January 2027, the Regulation requires that new import contracts for oil, gas and coal can only be concluded if same monitoring, reporting and verification obligations are applied by exporters as for EU producers. The Regulation will set out a methane intensity methodology and maximum levels to be met for new contracts.  

From 2030 onwards, maximum methane intensity values will start to apply, meaning that EU importers could be banned from entering into new contracts for import of gas, oil or coal with highest emissions. The import ban would depend on standards set by the Commission. The competent authorities of each Member State would have the power to impose administrative penalties if these provisions are not respected. 

The provisional agreement now needs to be formally adopted by both the Parliament and Council. It will then be published in the Official Journal of the EU and will enter into force 20 days later.