As 2025 ramps up, we’re looking forward to the rolling out of the EU’s landmark Methane Regulation (Regulation (EU) 2024/1787), with the first compliance reports due in August. This regulation marks a major shift in global energy governance, as it is the first to enforce methane emission standards on fossil fuel imports. Its impact will extend far beyond the EU, reshaping both domestic and international energy markets.
Why Methane? Why the Energy Sector?
Second only to CO2, methane (CH4) is a leading contributor to global climate change, making up about 11% of anthropogenic greenhouse gas emissions, and causing roughly 30% of global climate warming to date. In the short term, methane is much more powerful in terms of its global warming potential – about 28x, or 84x more potent than CO2 (on a 100-year and 20-year timescale, respectively). Additionally, methane emissions have significant public health impacts due to its role in the formation of ground level ozone and particulate pollution. Therefore, addressing methane emissions is an essential part of a mitigation strategy that aligns with the EU's energy and climate goals, and ultimately to limit planetary warming.
Fossil fuel production and use contributes between a quarter and a third of global anthropogenic methane emissions. At the same time, emissions in the energy sector present some of the most cost effective mitigation opportunities. Accordingly, the EU developed the Methane Regulation to drive measurable reductions in the sector.
Goals and Scope of the Regulation
The Methane Regulation aims to curb methane emissions in the energy sector, especially targeting preventable leaks and releases. The policy applies to:
domestic producers and importers, operators in oil, gas and coal sectors
importers and producers of crude oil, natural gas, and coal in the EU market.
At its core, the Regulation mandates robust monitoring, reporting, and verification (MRV) mechanisms, complemented by mitigation/remediation requirements.
The Regulation defines a stringent monitoring, reporting and verification (MRV) framework, additionally mandating regular leak detection and repair (LDAR) surveys to identify and fix methane leaks The Regulation splits leak detection and repair (LDAR) into two categories: Type 1 detects larger leaks while Type 2 uses high-precision instruments for smaller leaks. While the first verified, source-level quantifications of emissions are due in February 2026, companies must submit their LDAR programs, and an estimation of emissions by May 2025. The Regulation applies similar MRV requirements to the coal sector. Operators of active surface and underground coal mines, drainage stations, and closed underground coal mines must measure and report on methane emissions in all of their sites.
The Methane Regulation also affects foreign fossil fuels sold in the EU market. Given that 80% of its fossil energy is imported, the EU opted to extend the Regulation’s reach beyond its borders to address methane emissions across the supply chain. As such, importers are required to submit transparent, traceable emission reports spanning the entire supply chain. Compliance can be demonstrated either through the Methane Regulation’s MRV requirements or by adhering to the OGMP 2.0 Level 5 framework, a UN-led voluntary initiative promoting comprehensive, measurement-based reporting for the oil and gas industry. While full compliance is required by 2027, importers must submit information on exporters and producers by May 2025.
Reduction & Prevention Measures
The Regulation does not stop at identifying at reporting on emissions, operators are mandated to take concrete action to minimize methane emissions. Operators must:
Implement LDAR programs to systematically detect and repair leaks
Reduce flaring and venting, except in specific, justified cases (compliance required by February 2026)
Manage well closures responsibly: Inactive, temporarily plugged, or permanently abandoned wells require a mitigation plan by August 2026, with implementation within 12 months
A key aspect of the Regulation is that it does not mandate specific technologies, giving operators the freedom to choose the appropriate compliance solutions.
Enforcement & Penalties
Each EU member state is responsible for allocating necessary funding, determining penalties, and enforcing the Regulation. Penalties for non-compliance may include confiscation of profits from violations, public notices, and fines up to 20% of annual turnover. Additionally, non-compliant parties will be publicly disclosed.
The Bottom Line: A Strategic Opportunity
The EU Methane Regulation represents a landmark shift in methane governance. While compliance may seem daunting, early adaptation offers significant advantages. A forward thinking mindset allows companies to:
Avoid financial penalties
Enhance operational efficiency and reduce costs through methane control measures
Improve their environmental footprint, strengthening investor and public perception
Global scrutiny on methane emissions is intensifying, and the EU’s leadership in regulatory enforcement will likely influence policies in other regions. For energy sector players, this is not just a compliance challenge—it’s a chance to drive innovation, improve sustainability, and gain a competitive edge.