U.S. Natural Gas Exporters can be Compliance Ready for new EU Gas Import Regulations with MiQ Certification

On May 27, the European Council’s Transportation, Telecommunications and Energy Council formally adopted the European Union’s Methane Regulation (EUMR). This policy will go into force in June after it has been published.

This new regulation will have far-reaching impacts on oil and gas imported into the European Union (EU), as well as oil and gas produced within the EU. New methane emission reporting requirements, and ultimately the incorporation of a methane intensity cap for imported caps, will place significant information collection, reporting, and verification challenges for oil and gas producers and LNG exporters.

We applaud the  EUMR given that this is an opportunity to increase transparency on global methane emissions and ultimately reduce them. We do not, however, underestimate the significant implications of the regulations for the North American LNG sector. Simply put, unless LNG exporters can provide upstream (production-level) monitoring, reporting, and verification (MRV) information to EU LNG importers, as well as have this MRV information independently verified, it is unlikely that these exporters will be able to sell LNG in Europe.

MiQ’s methane performance standard and certification framework provides a path forward through the regulatory framework within which North American producers and exporters will soon find themselves working. Utilizing MiQ’s certification framework will allow producers to comply with the EU’s rigorous measurement, reporting, and verification requirements. MiQ’s program is currently the only operational certification and reporting framework that will satisfy the EU’s reporting and verification requirements.

The implementation of the EUMR changes the entire global LNG market. No longer will emissions reporting be a voluntary, ‘nice to have’ activity. Rather, the EUMR heralds the beginning of something of a compliance market. To place gas into the European market, foreign exporters will have to comply with these new reporting and verification requirements. This is a sea change in the LNG market. Operators that self-report, and programs that use frameworks that do not involve a rigorous, third-party verification program, will be hard-pressed to meet either the spirit or the details of the EU methane regulation.

EU Methane Regulation

The EUMR has a number of key areas that will impact US producers and exporters. Under the EUMR, European importers will provide MRV and verification information to European regulators. This information will have to be provided by the contractual counter-parties to the European importers, e.g., exporters or suppliers. The methane emission monitoring and reporting requirements only apply to sources at the production level. As a result, exporters/suppliers will have to provide monitoring, reporting, and verification information from up the supply chain – from the point of production. As a result, in order to be compliant with the EUMR (and to ultimately sell LNG in Europe), producers must be engaged in an ongoing, robust, and credible MRV program.

MRV and Reporting Requirements: The EUMR will require European importers to provide the following information for all gas imported into the EU. This information will need to be required for each producer and reflects production-site information.

  • Name of exporter and, if different from producer, name of producer.
  • Type and location of emission source.
  • Data on types of emission sources.
  • Information on quantification methodologies.
  • Data on all methane emissions from operated assets.
  • Information on whether the producer or exporter is conducting source- and site-level measurement and quantification.
  • Information on whether the data and reporting has been subject to independent third-party verification, and name of the verifier.
  • Methane intensity.
  • Whether the producer or exporter applies regulatory or voluntary measures to control methane emissions.
  • Type of equivalence (regulatory; producer-level; OGMP 2.0) (see below)

Required reports can initially use methane emissions information determined through emissions factors. Over time though (30 months after the EUMR goes into force), both source- and site-level measurement informed data will be required, and emission factor-based information will not be acceptable.

MRV Equivalence: To be in compliance with the EUMR reporting requirements, the EU importer will have to show that producers providing gas have MRV measures in place that are considered equivalent to those established in the regulation. If equivalence is not demonstrated, then gas from that producer cannot be imported into Europe.

There are three potential paths by which this can take place. The EU will prepare additional guidance about how this equivalence will be determined.

  • Pathway A – Regulatory Equivalence: The EU will determine that a third-party country (like the United States or Qatar) has an MRV regulatory framework in place for all producers that is at least as stringent as that being applied in the EU. This will require monitoring and reporting requirements that ensure source- and site-level quantification and reporting, as well as an effective compliance and enforcement program. This pathway will require third party verification of reported producer-level MRV information.
  • Pathway B – Producer Equivalence: In the absence of country-scale regulatory equivalence, a producer can be in compliance with the EUMR if it can demonstrate that is has monitoring, quantification, and reporting measures that are equivalent to standards in the EU. This will require monitoring and reporting requirements that ensure source- and site-level quantification and reporting. This pathway will require third party verification of reported producer-level MRV information.
  • Pathway C – OGMP 2.0: A producer can be in compliance with the EUMR if it can demonstrate that is a member of OGMP 2.0 and is monitoring and reporting at OGMP 2.0 Level 5. This pathway will require third party verification of reported producer-level MRV information. This robust verification requirement is a step beyond current OGMP 2.0 requirements.

Third-Party Verification of MRV: Third-party verification of gas imported into Europe is needed for compliance with the EUMR’s MRV regulation. Third-party verification must be used no matter which of the three equivalency pathways is used. Verification must take place at the production level, in order to verify emissions information reported. Third-party verification activities will include the following elements:

  • Conformity of emission reports.
  • Review of all data sources and methodologies.
  • Shall include announced and unannounced site checks.
  • Issuance of a verification statement.

The third-party verifier must be independent of the producer and be accredited. Further details, including the criteria and standards upon which the verification activity will take place, will be produced in forthcoming EU guidance over the coming months.

Methane Intensity Reporting: In 2028, importers will be required to report the annual methane intensity of imported gas at the production site. This information would be included in the emissions report. The methodology, or formula, for determining the methane intensity will be developed over time and established by 2027.

Maximum Methane Intensity: In 2030, a maximum methane intensity value will be imposed for all gas that is placed on the European market. Gas, whether imported or produced within the EU, cannot be sold if it has a methane intensity that is greater than that value. Importers will have to demonstrate that the methane intensity of imported gas is below that maximum methane intensity value. The maximum methane intensity value will be determined in 2029.

Timeline: The below graphic sets out the key time periods for compliance established under the EUMR (All of the following dates are approximate).

Implications for North American Producers and LNG Exporters

EUMR requirements will result in US producers and exporters having to provide significantly more monitoring, reporting, and verification information than is currently the case. Especially for commingled LNG cargoes, the reporting requirements – in terms of providing data from all producers involved in supplying gas for that shipment – will place significant challenges on US exporters (and European importers) to access accurate information. Similarly, the verification requirements will require producers to identify and coordinate with approved verifiers to ensure that the producer monitoring and reporting activities are credible. This is a process that is not currently adopted by the majority of operators in the oil and gas sector. These requirements will be applied to all producers – regardless of size – that produce gas that is ultimately imported into the European Union.

While emission factors can be used for the initial MRV reports (beginning June 2025), the EUMR makes clear that there is an expectation that producers will produce measurement-informed reports using both source- and site-level information in short order. By December 2026, all reports must use measurement informed monitoring data. Producers, regardless of size, will have to inventory their assets and sources, adopt bottom-up and top-down monitoring technologies, track emissions, record data, quantify the data, and produce reports. This challenge is underscored because some small operator and producers are not required to report methane information (under Subpart W) under current U.S. regulations. The EUMR requirements will now require these operators to do so. To do this credibly, as expected through the EUMR, is not an easy proposition. Resources and staff will have to be dedicated to collecting, assessing, and reporting these emission elements.

Third-party verification is a central part of the EUMR process. The verifier serves a critical role in providing credibility to the MRV information submitted by producers. This is valuable for not only regulators, but also LNG buyers. In order to ensure credibility in the verification process, verifiers should be subject matter experts with experience in the oil and gas sector. They also need to be an independent third party and should not have any conflicts of interest or have any financial interest in the outcome of the verification activity. As a result of these requirements, many oil and gas producers will have to engage verifiers – something that they may not have done before. For example, operators that are part of OGMP 2.0 currently engage in a rigorous reporting process. However, the audit associated with OGMP 2.0 would not satisfy the requirements of the EUMR. Similarly, producers or exporters that are currently self-reporting their emissions, even while utilizing a rigorous methodology, will have to engage with a third-party verifier if they want to be able to export their LNG to Europe. The verifiers will be auditing against a to-be-determined European standard. As such, operators will not only have to be willing to engage with a verifier and be willing to permit on-site inspections, but their reporting methodologies will also have to be consistent with the planned standard.

The most challenging element of the EUMR will be determining which producers will be required to report MRV information for any given export. The U.S. natural gas supply chain is very complex. In addition to differential ownership as a result of decentralized ownership, the multiple trades of gas, and the purchase of gas from natural gas pools, determining the provenance of gas used for export can be expected to be a challenging exercise for LNG exporters. This element will place serious constraints on parties to fulfill reporting requirements.

All of these elements – identifying producers, producing MRV reports, and verification – must be complied with in order to export gas to Europe. In other words, business as usual for some oil and gas producers will result in a lack of compliance with EUMR – and a subsequent inability to export LNG to Europe.

MiQ’s Certification Framework Solution

Each of the challenges posed to EU importers, U.S. exporters (contractual counter-parties to the EU importers), and U.S. producers by the EUMR can be addressed through MiQ’s existing certification framework.

MiQ is currently certifying over 20 percent of U.S. onshore natural gas production. This means that those MiQ certified operators are already reporting using measurement-informed data at the equivalent of OGMP 2.0 Level 5, are receiving methane performance (environmental attribute) certificates that track with the gas and utilize a third-party verification process. In other words, producers currently certifying under the MiQ standard would already be in compliance with the EUMR.

MiQ’s methane performance certification standard already fulfills all of the elements necessary to be in compliance with the EUMR requirements. The MiQ standard requires that operators – on an asset basis – utilize top-down and bottom-up methane emission monitoring, therefore ensuring that both site-level and source-level monitoring is taking place. MiQ requires emissions quantification to take place, and that methane intensity is determined. Therefore, MiQ-certified operators are already monitoring and reporting emissions data that will not be required by the EUMR until 2026 and 2028.

A central pillar in MiQ’s certification framework is the required use of third-party verifiers (auditors) to do on-site assessments of equipment and analysis of emissions data and reporting. These verifiers are accredited by MiQ to certify against the MiQ standard. To ensure that there are no conflicts of interest, the verifiers have no contractual relationship with MiQ, have no financial interest in the outcome of the audit and certification they are conducting, and third-party entities from the operator. They must also have subject matter expertise, having actual experience in the oil and gas sector. Because these verification activities under the MiQ standard are done on-site at the production facility, the MiQ standard does not allow for ‘desktop’ or spreadsheet audits.

Operators who are currently certified under the MiQ standard already utilize third party verifiers. These MiQ certification standard audits fulfill all of the criteria currently demonstrated in the EUMR. MiQ accredited auditors review emissions reports, data sources, and methodologies, and they conduct on-site evaluations and site checks. They are required to be independent third-parties (no connection with the operator) and are accredited by MiQ. As a result, MiQ-certified oil and gas operators are already in compliance with the EUMR verification requirements.

As noted above, perhaps the most challenging element of complying with EUMR requirements is establishing provenance of imported gas and producing MRV reports from all production sites from which the gas was produced. The MiQ certification system is designed to address this. Upon asset certification, MiQ provides the operator with one digital certificate for every mmbtu of gas produced at that site. The certificates not only provide information about the environmental attributes associated with the certification of that asset (i.e., methane performance) they also allow for a chain of custody. As the gas moves through the supply chain and is bought and sold, the certificates will similarly be bought and sold. Where a certificate may have a new owner, it will maintain the environmental attribute information. As a result, the certificate is a physical record of the methane performance information of the production site – providing a clear pathway for both the U.S. LNG exporter and the European importer to satisfy the EUMR reporting requirements for production level emissions data. The digital certificate is ultimately retired on combustion of the gas. The certificates are stored in MiQ’s digital registry. This ensures that double counting of environmental attributes does not take place. This is another necessary component to ensuring that the policy intent of the EUMR is achieved.

MiQ certificates are already being produced. In other words, this is an operational – and not theoretical – approach that has been demonstrated to be effective. Because certificates can provide the information and tracking ability necessitated by the EUMR, producers that are producing certificates will be in demand. Conversely, producers that are not utilizing credible certificates will not be in demand – because there is no credible way to demonstrate a linkage between the gas that is part of an LNG cargo to Europe and which particular producer the gas came from. Certificates as a tool, then, are tailor made to address EUMR producer-level reporting requirements.

Call to Action

MiQ is currently the only organization that has an operational program that satisfies the EUMR’s reporting and verification requirements. MiQ’s rigorous measurement-informed monitoring and reporting requirements, in combination with its operational field audits (verification activities) satisfy the EUMR.

Exporters, as the contractual counter-parties, to European LNG importers will be required to provide producer-level methane performance information to be in compliance. MiQ’s program and certificates are tailor-made to address these requirements. Purchasing gas that has MiQ certificates associated (bundled) with it allows these parties to provide the information needed to transact gas with Europe. The MiQ program is field-tested and operational.

MiQ looks forward to engaging with LNG exporters and U.S. gas producers to explore using MiQ’s certification framework to satisfy the EUMR requirements. Not only will the MiQ pathway ensure compliance, but it will also readily provide information about the methane performance profile of North American gas to provide these producers and exporters with a competitive advantage. 

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