Recommendations on Ensuring EU Security of Affordable Supply in Light of the Methane Emissions Regulation
Download the full document here.
The European Union's Methane Emission Regulation (MER) represents an important step in aligning climate ambitions with global energy trade. Eurogas fully supports the MER’s overarching goals of reducing methane emissions and ensuring sustainable energy imports. However, the Regulation’s timeline, uncertainties and extraterritorial implications create significant challenges for the flexibility and security of the EU’s gas supply, particularly as the EU seeks to replace Russian gas imports by 2027.
Observed impact
Blocking Contracts and Increasing Risk: The Regulation is already preventing certain gas supply contracts from being signed. Uncertainties regarding compliance with requirements yet to be defined, liability risks, and potential penalties (up to 20% of the importer’s annual turnover) make it difficult for parties to assess risks and move forward with agreements. For example, parties negotiating import contracts today are required to comply with methane intensity calculation methodologies that are still to be specified by secondary legislation.
Reducing Supply Options: The regulation restricts the pool of available suppliers on top of limiting access to (long-)term contracts for EU importers, at a time where the EU aims to diversify away from Russian energy by 2027. In particular, the requirement for third-country producers to adopt MRV-equivalent systems within a shortened timeframe could pose a significant challenge.
Increasing Exposure to the European Gas Markets: By complicating access to (long-)term contracts, the Regulation could disincentivise EU importing activities towards greater reliance on gas procurement within the EU gas system e.g. in the spot market and subject to its volatility and supply risks.
Complexity in Reporting Requirements, Not Environmental Ambition: While some producers may not be able to meet the environmental standards in time, a key issue is the unworkable reporting requirements, including for operators that are able to meet those requirements.
Weakening Europe’s Competitive Position: Regions are competing on a global market for a finite supply. The added uncertainty and liability risk from the Regulation may give third-country markets with fewer restrictions a competitive edge, further complicating the EU’s diversification efforts.
To ensure energy security and affordability while supporting diversification objectives, clarifications, guidance and targeted adjustments to the MER are necessary. These should be implemented while aiming to avoid unnecessarily undermining the environmental ambition of the Regulation.
Read all the detailed recommendations in the document below.
