The Trump administration this week tried to browbeat European Union leaders, claiming that regulations limiting methane emissions from the production of imported natural gas hurt US companies exporting that gas.
US officials want the EU to delay implementation until 2035, exempt US companies, or scrap the policy altogether.
But could the administration be doing more harm than good for US producers?
In fact, US oil and gas companies are at a competitive advantage in the coveted European market for liquified natural gas (LNG) compared to other countries that have not made as much progress on methane. And Europe is the most important market for US gas, currently buying around two-thirds of American exports.
Europe is the world’s largest gas importer, while the United States is the world’s largest LNG exporter. US export capacity is expected to double in less than five years as costly new terminals come online. Meanwhile, American producers are years ahead of others in deploying new technology to harden systems that keep methane out of the air and in the pipe, reducing emissions of the potent climate pollutant while boosting profits.
The European Union Methane Emissions Regulation (EUMR), adopted in August 2024, started to take effect on a staggered basis earlier this year. It is also part of an energy security strategy designed to reduce European dependence on Russian natural gas following the invasion of Ukraine.
Besides requiring European producers to reduce their domestic methane emissions, the rules require EU importers to show that imported fuels meet rigorous standards for emissions measurement, reporting and verification starting in 2027. In 2030, importers will have to meet a methane intensity standard limiting emissions as a percentage of gas produced.
Efforts to reduce methane emissions are already paying off
Cutting methane emissions from the oil and gas sector is the fastest, most cost-effective way to slow the rate of global warming. Indeed, industry efforts to reduce emissions are already paying off. State and federal regulations as well as voluntary standards have resulted in great strides by many US producers.
All of which means that under the EU rules, the US oil and gas industry is positioned to have a significant advantage over companies from other countries that have not yet begun the methane mitigation journey.
The deal flow is still strong
In a letter to EU leaders, the US Department of Energy argued the regulations create uncertainties that stifle US export deals. But a new study by Rystad Energy found no impact on US/EU gas contracting activity since the rules took effect last August following a long runup. Seemingly unfazed, US companies are continuing to sign long-term gas contracts.
Likewise, opponents say the EU methane standard could cause a supply crunch. But the Rystad analysis concludes that by 2027, the amount of available gas meeting the highest global standard for methane reporting will be more than double Europe’s total gas demand, more than enough to alleviate energy security concerns.
By threatening an energy trade war against one of our closest economic partners – and the biggest customers for US LNG – the administration risks undermining a crucial competitive advantage for US producers. Maintaining strong methane performance would also put American exporters on stronger footing in the biggest Asian markets, where Japan and Korea are working out details of their own methane import policy.
By Dan Grossman - Vice President, Global Energy Transition, Environmental Defence Fund