Investors insist that EU methane regulations be upheld despite US pressure
A letter obtained by the.
Money managers such as Ninety One Group, Pictet Group Railpen, and Royal London Asset Management have urged the EU not to change its rules that require importers of oil to monitor the methane emission of their suppliers and to report it.
Scientists say that methane, one of the strongest greenhouse gases, is responsible for one-third the global warming since the beginning of industrialization.
Investors are worried that the European Union will include its methane regulations in the simplification agenda of the bloc after U.S. Energy Secretary Chris Wright stated recently that the current legislation would prohibit the United States to export liquefied gas to Europe.
"The goals are commendable and we all want methane to be reduced. We will reduce methane emission. It would be counterproductive to have laws that prevent American gas from coming here, both in terms of social costs and environmental concerns. Wright stated in September that "these laws must be changed".
First phase of EU methane laws is now in effect and appears not to have affected U.S. exports of gas to Europe. Importers of gas to Europe will be required to report their suppliers' efforts to lower methane emissions starting May 2025.
The European Commission's spokesperson expressed confidence that the EU regulation of methane would not create any trade barriers.
As part of the trade agreement struck earlier this summer, the EU has committed to increase its purchases of U.S. Energy - including LNG as well as oil, nuclear fuel and other fuels - by $250 billion annually.
Investor group warns that reopening regulation will introduce unpredictable outcomes, undermine investors and companies working to comply with rules and slow down efforts towards reducing the amount of harmful methane released into the air.
"Weakening regulations on which companies already base their investment decisions is counterproductive, and could undermine global methane reduction initiatives," said Eric Pederson. He is the head of responsible investments for Nordea Asset Management.
Europe has increased its imports massively of U.S. Liquefied Natural Gas (LNG) as it seeks replacement Russian energy after Moscow’s full-scale invasion in Ukraine 2022.
Data from the Commission shows that between January and August of this year, the U.S. provided 57% of EU LNG or 49.2 bcm. In 2021, before Russia's war on Ukraine, the U.S. provided 28% of EU LNG or 18.9 billion cubic metres.
The EU's tougher methane legislation, which is set to take effect in 2027, has sparked more concern among the industries.
(source: Reuters)
