EU Methane Regulation: Commission adopts recommendations on compliance and penalties

On 20 July 2026, the European Commission adopted two recommendations to guide EU Member States on compliance solutions and the penalties regime under the EU Methane Regulation: 

• Recommendation on compliance solutions and optional model clauses and Annex (“Recommendation on compliance”);
• Recommendation on the application of penalties. 

Publication was accompanied with Commission’s press release and Q&A.

The Recommendations seek to establish a predictable framework for the implementation of the Methane Regulation as key import requirements approach their 1 January 2027 start date, while the Commission continues to resist calls to reopen the legislation itself.

Background: the Methane Regulation

The Methane Regulation, adopted in 2024, establishes a new EU legal framework for the measurement, reporting, verification (MRV) and mitigation of methane emissions in the energy sector. It introduces mitigation measures to prevent such emissions, including detecting and repairing methane leaks and limiting venting and flaring. As the majority of methane emissions linked to fossil energy consumed within the EU occur outside the EU, the Methane Regulation is the world's first to regulate methane emissions from imports. 

The Methane Regulation's import requirements are being implemented in phases:

• as of 1 January 2027, importers must demonstrate that the concerned producers are subject to measuring, monitoring, reporting and verifying methane emissions equivalent to the requirements of the EU Methane Regulation (for contracts concluded or renewed after 4 August 2024; for pre-existing contracts, importers must use all reasonable efforts);
• from 5 August 2028, importers must report on the methane intensity of the production of oil, gas and coal that they are placing on the EU market; and
• from 5 August 2030, importers must demonstrate that the methane intensity of production is below certain maximum values to be set by the Commission (for contracts concluded or renewed after 5 August 2030).

The Methane Regulation does not impose an import ban on non-compliant oil, gas or coal. Instead, a system of penalties is supposed to be put in place and enforced by the Member States. For more information on the Methane Regulation, see our previous blog post. 

 What issues do the Recommendations aim to resolve?

As the January 2027 deadline approaches, the implementation of the Methane Regulation has faced mounting challenges on several fronts.

On compliance methodology, the Methane Regulation is open to different compliance solutions, but there has been significant uncertainty about how importers in complex supply chains (such as LNG, where gas from multiple sources is commingled) can demonstrate compliance to national authorities.

On penalties, only a minority of Member States have notified the Commission of their penalty regimes. The current lack of penalty regimes in most Member States, with no possibility to assess the risk of potential non-compliance, has been raised by importers as a major risk factor preventing the signing or renewal of contracts for supply to the EU and increasing the risk of termination of existing supply contracts. 

On the geopolitical context, since 27 February 2026, the Strait of Hormuz has experienced acute geopolitical disruptions leading to its closure, widely regarded as the largest disruption to affect global energy supplies since the 1970s. 

Recommendation on compliance

The first Recommendation brings certainty and clarity on how to demonstrate compliance with the obligations coming into force on 1 January 2027. Key points include:

• The Methane Regulation does not require physical tracing of molecules, deliveries or cargoes. It does not specify any concrete means or requirements for evidence of compliance.
• Where a direct or indirect relationship between the producer and the importer is difficult or impossible to establish (for instance, due to the practice of mixing different supplies for transport or storage, or trading through hubs or exchanges), importers can rely on compliance solutions known as "trace-and-claim". This approach tracks the transactions of crude oil, natural gas or coal down the supply chain from the production level to the importer, including through exchanges and trading hubs.
• Another compliance solution is "certification", under which compliance solution providers issue certificates to producers who have demonstrated evidence of compliance. These certificates can be obtained by importers as an alternative to providing evidence of physical or contractual tracking.
• Compliance solutions should meet certain minimum criteria for Member State competent authorities to deem them suitable, in order to minimise the risk of fraudulent or multiple issuance or claims.
• The Recommendation also provides optional model contract clauses intended to promote fair, transparent and sustainable contractual practices, support compliance, and foster reliable supply of crude oil, natural gas, LNG or coal to the EU. 

Recommendation on penalties 

The Commission recommends that Member States should not apply penalties provided for in the Methane Regulation in relation to certain failures to provide information due in 2027, 2028 and 2029.

This does not entail, however, a suspension of the underlying compliance obligations. The relevant obligations set out the Methane Regulation continue to apply, even if it is recommended that Member States do not apply the related penalties.  

Legal force of the Recommendations

Recommendations have no binding force under Article 288 TFEU and are therefore not directly enforceable in the same way as regulations or directives. They are nonetheless not devoid of legal effect: national courts are bound to take them into consideration when deciding disputes, in particular where they illuminate the interpretation of national implementing measures or supplement binding EU provisions.

The Recommendation on penalties does not prevent Member States from laying down and applying national penalty regimes in accordance with Article 33. Member States could in principle adopt penalty regimes sooner and the Recommendation does not prevent Member States from laying down national penalty regimes in accordance with the Methane Regulation.

What to expect next

The Recommendation on penalties provides that the Commission will monitor and review its application by 1 January 2028, in the context of the broader review of the Methane Regulation.

According to the press release, the Commission remains ready to take further measures if the security of supply becomes at risk in the coming months.