EU Considers Modifications to Methane Rules to Support U.S. LNG in Trade Talks

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The European Union is exploring ways to help U.S. gas exports meet its methane emissions regulations, aiming to avoid a trade conflict with U.S. President Donald Trump, according to three sources familiar with the matter. The European Commission is preparing its proposal for trade talks with the U.S., with energy being a potential component of a broader trade agreement.

Trump has repeatedly urged the EU to purchase more American oil and gas to reduce the U.S. trade surplus. European Commission President Ursula von der Leyen has suggested that the EU could increase its imports of U.S. LNG, particularly as it plans to phase out Russian gas by 2027.

As part of the ongoing energy discussions, the Commission is considering using flexibility in the application of EU methane rules to benefit U.S. LNG exporters. The aim would be to avoid weakening the law while implementing technical measures that would allow U.S. exporters to meet "equivalent" methane standards, thus automatically complying with EU regulations. However, the sources did not clarify the specifics of this approach.

This plan could be complicated by Trump's proposal to eliminate U.S. regulations that require gas producers to report methane emissions, making it harder for the EU to justify allowing U.S. companies to automatically meet its standards.

A European Commission spokesperson declined to comment on potential flexibilities for U.S. LNG exporters, noting that the Commission maintains an ongoing dialogue with the industry regarding relevant legislation.

Methane is a significant greenhouse gas, second only to carbon dioxide in causing climate change. Starting this year, the EU requires oil and gas importers to monitor and report the methane emissions tied to their imports. The new methane regulations could give U.S. LNG an advantage over gas from suppliers with higher methane emissions, such as Russia and Algeria.

However, U.S. exporters have expressed concerns about their ability to comply with the law due to the fragmented structure of the U.S. gas industry, which makes it difficult to track methane emissions across the value chain. A single LNG shipment may contain gas from multiple fields, complicating emissions tracking.

From 2027 onward, the EU will require foreign suppliers to align with its methane standards to sign new contracts with European buyers. The Commission recently held a virtual meeting with U.S. LNG companies to address their concerns.

The U.S. is already the EU's largest LNG supplier, accounting for 45% of the EU's LNG imports last year, which represented 16.5% of the EU's total gas and LNG imports.

Paraphrasing text from "Reuters" all rights reserved by the original author