What’s Next For Oil And Gas Methane Regulations

Center for Strategic & International Studies

March 22, 2023

Proposed methane regulations for the oil and gas industry are in the works in the United States and the European Union. These new rules—especially the U.S. regulations—could play a critical role in curbing emissions. This brief summarizes the next steps for methane rules on both sides of the Atlantic, including an overview of the emerging regulations in the United States and a synopsis of the EU methane legislation process. It identifies areas that require more analysis, such as how closely measurement, reporting, and verification (MRV), leak detection and repair (LDAR), and reporting requirements will align. The brief also summarizes the current EU approach to reducing methane emissions from its gas imports as well as its longer-term aspirations, outlining the implications for gas exporters to Europe.

Methane is a potent greenhouse gas, with more than 80 times the warming potential of carbon dioxide in its first 20 years in the atmosphere. Methane is likely responsible for at least 25 percent of global warming in the industrial era. Because it is a short-lived climate pollutant, reducing methane emissions quickly is one of the best ways to slow the pace of global warming—but annual increases in atmospheric concentrations of methane are still growing. Policymakers are keen to make progress and recognize that the oil and gas sector presents the best opportunities for cost-effective methane abatement. Proposed methane regulations for the oil and gas industry are in the works in the United States and the European Union, and these new rules—especially the U.S. regulations—could play a critical role in curbing emissions.

Regulations in Washington, D.C., and methane legislation in Brussels have not yet been finalized and there is still substantial uncertainty about how the EU legislation will take shape. Although proposed U.S. and EU rules share many common elements, their measurement, reporting, and verification (MRV) and leak detection and repair (LDAR) requirements vary. The two jurisdictions are also adopting different approaches to methane detection technology. Perhaps the most critical link between the U.S. and EU methane rules concerns natural gas imports to Europe. For now, the European Union seems unlikely to impose a strict methane performance standard or specific MRV requirements on suppliers. But Brussels does seem likely to require gas importers to provide information about suppliers’ MRV and methane mitigation practices.

This brief summarizes the next steps for methane rules on both sides of the Atlantic, including an overview of the emerging regulations in the United States and a synopsis of the EU methane legislation process. It identifies areas that require more analysis, such as how closely MRV, LDAR, and reporting requirements will align. Finally, the brief summarizes the current EU approach to reducing methane emissions from its gas imports, as well as its longer-term aspirations, outlining the implications for gas exporters to Europe.