Reducing methane emissions in the energy sector

KEY POINTS

Methane emissions include direct emissions from any component, whether they result from venting, incomplete combustion from flaring, or leaks.

The regulation applies to:

• oil and fossil gas exploration and production, and fossil gas gathering and processing;
• natural gas transmission and distribution (excluding the point of final consumption);
• active, closed and abandoned coal mines;
• inactive, temporarily plugged, permanently plugged and abandoned wells;
• methane emissions related to crude oil, natural gas and coal placed on the EU market, including those occurring outside the EU.

Measuring and reporting

Operators (entities controlling energy assets) must:

• quantify their methane emissions at both the source and site levels, have them checked by independent third-party verifiers and report them annually;
• submit annual reports on LDAR activities and on venting events and flaring events.

Detecting and repairing leaks

Oil and gas operators must:

• implement mitigation measures to prevent and minimise methane emissions;
• develop and submit LDAR programmes outlining how they will detect and repair leaks;
• carry out LDAR surveys at set intervals to detect leaks and repair components emitting methane above the set thresholds;
• use advanced detection technologies if approved by the competent authorities;
• repair leaks immediately, or provide justification if the delay is longer than five days.

Venting and flaring

• Venting is generally banned except in emergencies or when strictly necessary, and is allowed only if flaring is not technically feasible or poses safety risks.
• Routine flaring is banned. Flaring is allowed only when alternatives, such as re-injection, are not feasible.
• New sites must use zero-emitting equipment wherever possible.
• Operators are required to use only flare stacks with a destruction and removal flaring efficiency of at least 99 %.

Inactive wells and abandoned coal mines

EU Member States or the responsible parties must:

• monitor and report methane emissions from inactive wells and mines;
• develop mitigation plans to remediate and permanently plug wells if necessary;
• establish an inventory of inactive, temporarily plugged, permanently plugged and abandoned wells and quantify and report the methane emissions of such assets;
• set up and make publicly available an inventory of closed or abandoned underground coal mines where coal production has been discontinued since 1954 and install measuring equipment in mines above a certain threshold to measure and report source-level methane emissions;
• develop and implement mitigation plans for inactive and plugged wells and abandoned coal mines.

Imports and emission monitoring

Importers of crude oil, natural gas and coal must:

• report certain methane emissions-related data and information from countries and companies exporting to the EU, from 2025;
• demonstrate that they are importing from producers that are subject to measuring, monitoring, reporting and verifying methane emissions that are equivalent to those set out in the regulation, from 2027;
• report on the methane intensity of production, from 2028;
• demonstrate that the methane intensity of production is below certain maximum intensity values, from 2030.

Transparency, global methane monitoring and rapid response

• The EU is required to set up a database to provide transparency on methane emissions relating to imported fossil fuels.
• The EU is required to set up a global methane monitoring tool to detect high-emitting events using satellite data.
• A rapid reaction mechanism will notify Member States and non-EU countries of super-emitting events and request remedial measures.
• The EU aims to engage in dialogues with non-EU countries to speed up methane reduction and set up early detection systems.

Costs

• Regulatory authorities must consider the costs incurred by regulated entities to comply with the regulation when approving tariffs.
• The European Union Agency for the Cooperation of Energy Regulators will provide benchmarking data to assess costs related to methane emission reductions.

Standards

In accordance with the regulation, European standardisation organisations are requested to draft standards covering:

• methane emissions measurement and quantification,
• LDAR surveys,
• venting equipment.

If the requested standards are not delivered, or are inadequate, the European Commission can set mandatory technical requirements through delegated acts.

Compliance and penalties

Member States must:

• designate and ensure sufficient resources for competent authorities to monitor and enforce the regulation, with the competent authorities setting up contact points;
• carry out routine and non-routine inspections to ensure compliance and publicise inspection reports;
• establish rules for penalties for non-compliance.

Penalties must be effective, proportionate and dissuasive, and include fines that remove any economic benefits gained by breaking the rules.

Fines can be up to 20 % of annual turnover, with reductions or exemptions in specific cases. Authorities must publish annual information about the penalties imposed.

The Commission monitors and reports on the regulation’s effectiveness every five years.