EU Council agrees its position on the regulation on methane in the energy sector

In December 2022 (at its meeting on 19 December) the Transport, Telecommunications and Energy Council agreed a general approach on the regulation on reducing methane emissions in the energy sector. The proposal, presented by the European Commission on 15 December 2021, imposes on oil, gas and coal producers obligations concerning measurement, reporting and verification of emissions, leak detection and repair, and limits on venting and flaring of gas. The Council's position makes it possible to begin negotiations with the European Parliament.

What is changing

The regulation is to be the first EU act dedicated to methane in the energy sector. It provides, among other things, for:

• an obligation to measure and report emissions in line with uniform standards,
• periodic leak detection and repair (LDAR) inspections,
• a limit on routine venting and flaring of gas,
• requirements for coal mines, including those concerning methane drainage,
• rules for fuel imports, ensuring comparable emission transparency among suppliers from outside the EU.

In its position the Council clarified the deadlines and scope of the requirements for imports, as well as oversight issues.

Significance for the industry in Poland

For Poland the regulation matters because of hard coal mining and the gas grid. For the biogas industry the direct obligations are limited, because the regulation concentrates on fossil fuels. However, methane measurement and reduction are becoming the standard across the whole gas value chain. Grid operators will increasingly demand high standards of tightness and monitoring from everyone injecting gas, including biomethane producers.

In the longer term it is worth noting that the requirements for imports of fossil fuels may raise their cost and improve the competitiveness of renewable gases, which are not burdened with this regulatory risk.

Why measurement is key

To date much of the data on methane emissions comes from estimates, not measurements. The regulation is meant to change this by introducing a requirement for source-level measurement and reporting in line with international standards. Good data make it possible to distinguish real leaks from modelled values and to target repairs. For the whole gas market this means greater transparency, and for customers the ability to assess the carbon footprint of the gas they buy.

The Council's position against the Commission's proposal

The Council retained the main architecture of the Commission's proposal, but refined the details concerning inspections, deadlines and imports. For gas customers the most important thing is that the regulation is meant to increase transparency: it will be possible to assess how much methane leaked in the supply chain of a particular gas. Over time this information may influence prices and contracts.

What next

After the positions of the Council and Parliament have been adopted, trilogue negotiations will begin. The parties will argue over the pace of introducing requirements for imports, the scope of inspections and sanctions. Biogas producers should prepare for growing requirements on installation tightness and methane monitoring, even if they are not directly covered by the regulation.