EU Eyes Flexibility on Methane Rules to Avert Gas Supply Risk
(Bloomberg) -- The European Union will soon offer flexibility to companies on both penalties and tracing energy imports to help ensure that its landmark law to tackle methane emissions in fossil fuel imports doesn’t put its supply at risk.
The European Commission, the bloc’s executive branch, will issue documents to guarantee that fines for companies that are unable to comply with the rules on the powerful greenhouse gas do not “constitute a problem for security and supply and that penalties have to be proportionate,” according to Ditte Juul Jorgensen, director general for energy.
The commission has resisted weakening the law, arguing that it’s needed to combat climate change. However, high energy prices are at the top of the bloc’s political agenda, with concerns over its declining competitiveness with China and the US. The Iran war has served as another reminder of the EU’s reliance on fossil fuel imports.
The bloc would also recommend a light-touch approach to monitoring, reporting and verifying sources of emissions, and there will be no need to “track to the well, to the cargo, to the molecule,” Jorgensen said at an event in Brussels.
The EU’s methane rules, designed to curb emissions of a greenhouse gas that’s 80 times more powerful than CO2 over its first two decades in the atmosphere, have been fiercely criticized by the US government over concerns that they could hamper exports of liquefied natural gas to the bloc. The US is now Europe’s biggest supplier of LNG.
Next year, fossil fuel imports will have to be aligned with the EU’s rules. By 2030, penalties will be issued for imports that are above a methane-intensity threshold. Under the rules, companies could be fined as much as 20% of annual turnover.
Jorgensen said the view to limit fines for non-compliant companies had the support of all 27 member states. Obligations will mean that only a certain share of a country’s energy production will need to be monitored, not every molecule, she added.
Andreas Guth, secretary general of the industry lobby Eurogas, said that the proposed flexibilities should be accompanied by a “stop-the-clock” suspension of the rules to allow companies more time to adjust to the changes.
“It’s good that we have discussions on penalties,” Guth said, but the market needs to see it in place before it can respond “because your legal compliance department doesn’t have anything tangible to go on.”
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