EU to waive penalties on oil and gas companies that violate methane laws for three years

A draft document seen by revealed that the European Union would ask its member states to waive penalties for three years on oil and gas companies who 'breach their methane emission law' in response to disruptions to energy supplies caused by the Iran War.

The move was made in response to pressure from the U.S. Government and oil and gas industry associations, which warned that the law could hinder Europe's ability for fuel supply.

This would undermine the EU's first-ever climate policy. It was intended to crack down on methane leaks, a powerful greenhouse gas that is the second-largest cause of climate changes after CO2 emissions.

According to a draft document of the European Commission, which was seen by, EU countries should not penalize companies who violated the methane laws in 2027, 2020, and 2029 except for "large-scale fraud breaches".

It said that the change would apply to all existing oil and natural gas supply contracts, as well as those signed or renewed prior to January 2028.

It said that member states shouldn't apply penalties because they would endanger the security of the energy supply and expose European businesses and consumers to the risk of high energy prices and shortages.

The document is a "recommendation", a type EU act that instructs a country to follow EU law, but it is not legally binding.

From January 2027, the EU methane law requires imported gas to comply with emission monitoring and verification standards equivalent to Europe.

If companies fail to comply, they could face fines of up to 20 percent of their annual revenue.

The majority of EU governments have not yet confirmed the penalties they will use to enforce the law. This has led industry to warn that the threat of large fines could deter companies from signing new gas supply agreements. The Trump administration demanded that the EU go further and exempt U.S. gas and oil from the rules.

Environmental campaigners claimed that removing the penalties would turn the EU's methane law into a "paper Tiger".

Flora Witkowski is the coordinator of the gas policy at Climate Action Network Europe. She said that if the EU was serious about securing energy, they should not undermine rules designed to reduce dependency on fossil fuels. (Reporting and editing by Kirsten Doovan; reporting by Kate Abnett)

(source: Reuters)