EU Considers Easing Methane Rules for US LNG to Avoid Trade Rift

The European Union is considering ways to allow US liquefied natural gas (LNG) exporters to meet its new methane emissions regulations more easily, in an effort to ease trade tensions with US President Donald Trump and potentially prevent retaliatory tariffs, as reported by Reuters.

The move is part of a broader strategy by the European Commission to prepare for trade negotiations with the US, as both sides signal a willingness to strike a deal that includes energy as a key component.

Trump has repeatedly urged the EU to increase American oil and gas imports to reduce its trade surplus with the United States. In response, European Commission President Ursula von der Leyen has said the EU is open to increasing LNG purchases from the US, especially as the bloc phases out Russian gas by 2027

Flexibility in Methane Compliance

Under EU law introduced this year, importers must monitor, and report methane emissions associated with imported oil and gas. By 2027, new import contracts will require suppliers to have methane standards equivalent to the EU's. Methane, the second-largest contributor to climate change after carbon dioxide, is a critical focus in the bloc’s climate strategy.

To navigate this regulatory challenge, the Commission is exploring technical flexibilities that would allow US LNG to be deemed as meeting equivalent methane standards, even if US regulations differ. This could involve recognizing certain US practices or data collection methods sufficient for EU compliance, although no specifics have been confirmed.

According to Reuters, one potential hurdle is Trump’s stated intention to dismantle current US rules that require gas companies to report methane emissions. If enacted, such a rollback could complicate the EU’s justification for granting equivalency to US exporters under its methane legislation.

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Balancing Climate Goals and Trade Diplomacy

Reuters reports that US LNG exporters have raised concerns about the practical challenges of complying with the EU methane rules. The decentralized nature of the US gas industry makes it difficult to trace emissions along entire supply chains, especially when LNG shipments combine gas from multiple sources.

US LNG holds a market edge over higher-emitting suppliers like Russia and Algeria, making up 45% of the EU’s LNG imports in 2023 The European Commission recently met with US LNG firms to address the impact of the EU’s new methane law, with outcomes likely to influence future transatlantic energy trade, especially amid potential US policy shifts.