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The writer is the US ambassador to the European Union
Europe cannot secure affordable, reliable energy while saddling its suppliers with rules that drive up costs, reduce supplies and create uncertainty. Energy importers and producers are now warning that the European Union’s methane regulation is just such a rule.
This regulation could precipitate another energy crisis at a time when Europe can ill-afford one. Brussels already appears to be aware of the risks. Earlier this month, the EU Commission floated recommending “flexibilities” to the stringent requirements in an effort to reduce supply security concerns.
Unfortunately, avoiding an energy crisis is going to take far more than “flexibilities” that tweak the edges of a fundamentally flawed regulatory framework. The industry warns of price impacts “equivalent to those witnessed on European energy markets due to the ongoing crisis in the Middle East”. It could be a long, cold and costly winter.
Half measures will not solve this problem. The EU must heed calls from industry, member states and members of the European parliament to address the regulation’s core defects if it truly wants energy security, industrial competitiveness and a role in the energy-intensive AI economy.
The original methane regulation was intended to reduce methane leaks from the fossil fuel supply chain — a reasonable goal. US policies, combined with innovations such as advanced leak detection and repair technologies, satellite monitoring and best practice standards have driven US methane emissions from oil and gas down sharply between 2015 and 2023 even as production has soared. American LNG on average is among the lowest methane-intensity fuels available on the global market.
The approach in Brussels has been different. The EU’s methane regulation imposes extraterritorial, prescriptive and paperwork-heavy requirements on importers. This will restrict access to supply options, forcing EU factories, power plants and households to face an energy supply gap and higher prices. In an era when European homes and industries are already reeling from high energy prices, every extra euro matters.
Flexibly applying the regulation’s requirements will not reduce the legal risk importers and suppliers face if the EU later decides its “flexibilities” were too generous. Without specific changes to the regulation, producers and importers will need to build expensive new systems and navigate shifting interpretations to avoid penalties of up to 20 per cent of their global revenues. This is a risk no rational CEO will accept.
Similarly, suppliers will hesitate to sign the most cost-effective long-term contracts when the regulatory goalposts could move again in two or three years, making it impossible to meet their contractual obligations. The result is predictable: reduced incentives for producers to prioritise the European market, an unnecessary security of supply crisis and higher prices for European consumers. This is self-defeating.
The war in Ukraine and resulting scramble for non-Russian energy offers a stark reminder of how our energy partnership should work. US LNG and crude oil exports to Europe surged precisely because American producers could respond quickly and reliably. Yet if compliance costs and market uncertainty persist, global suppliers — including US companies — will quite rationally redirect supplies to markets that reward reliability rather than punish it.
The US-EU relationship thrives when we align incentives, not when we export “one-size-fits-all” regulatory requirements. Proposing “flexibilities” is a welcome acknowledgment that incentives matter. Yet, to have an impact, the Commission must take decisive action. America stands ready to be the reliable partner Europe needs. We can scale exports rapidly if the EU’s regulatory environment welcomes us. Brussels must therefore match its new pragmatism with the boldness the moment demands.
