The roll out of European methane regulation this year is set to reshape the LNG sector, with the potential for significant upside depending on the final implementation.
The Regulation on the Reduction of Methane emissions in the Energy sector (MERR) is one of several regulatory frameworks developed by the EU to reduce fossil fuel impacts. This legislation first entered into force on 4 August 2024 but is set to be implemented in phases over the coming years.
While much of the regulation has been agreed there remains some room for debate on key aspects and some within the bloc are now calling for tweaks to boost LNG imports. Lithuania’s energy minister, Zygimantas Vaiciunas, is one proponent, calling for “serious talks” to take place to boost imports of LNG from the US.
“There should not be too many technical burdens, technically no thresholds for US LNG to come into the market,” Vaiciunas said.
Tightening requirements
While the MERR is only one in a raft of regulatory measures imposed by the EU, it is set to become increasingly important for operators as it focuses across the entire supply chain.
In May this year, MERR will require operators to submit a leak detection and repair (LDAR) programme to authorities. This will require a detailed audit to identify and detect sources of methane leaks and other unintentional methane emissions for existing sites. For new sites, there is a stay of six months from the date of start of operations.
Next year, routine flaring and venting will become prohibited in nearly all cases, with limited exceptions only in case of an emergency, malfunction or where otherwise unavoidable. The European Commission is also expected to establish a methane transparency database and a methane monitoring tool based on satellite data in 2026.
This initiative aims to enhance the tracking and management of methane emissions, ensuring that operators comply with the regulation's stringent requirements. The database and monitoring tool will be crucial in identifying and addressing methane super-emitting events, further reinforcing the EU's commitment to reducing methane emissions.
The investments required to detect and repair methane leaks, as well as to monitor and report emissions, will all add to the overall cost of compliance, but on the flip side this may act as an accelerator for the energy transition. As new biofuels enter the market it is hoped that monitoring will help provide better justification for LNG pathways over more polluting alternatives.
