The oil and gas industry was caught off guard last week when EPA proposed giving it a nine-year reprieve from greenhouse gas reporting.
And it wasn’t a welcome surprise, industry insiders and experts say.
“I think we maintained some hope that they wouldn’t go this far because we had advocated to the EPA that they shouldn’t do that,” said one industry lobbyist granted anonymity to discuss the proposed rule freely.
EPA’s proposal would relieve major emitters in most industrial sectors from the duty to report annual emissions above a certain threshold. The reporting program, which has existed since 2009, feeds into EPA’s comprehensive greenhouse gas inventory.
The agency was widely expected to leave the oil and gas industry out of the proposal. Greenhouse gas reporting for oil and gas producers, processors and operators — which falls under the program’s “Subpart W” — is mandated under the 2022 climate law.
The oil and gas industry has sought modifications to the Biden-era rules for that reporting, but no major trade associations have asked EPA to end it. The Trump EPA was expected to propose different —and likely more industry-friendly — reporting methodologies for oil and gas next summer.
Instead, EPA unexpectedly proposed shelving annual emissions reporting for oil and gas until 2034.
The agency is claiming that a provision in the Republican megalaw that suspended a related fee on methane emissions until 2034 also empowers the administration to mothball emissions reporting until the same year. That assertion is controversial and likely to be litigated if the rule is finalized in its current form.
Oil and gas experts say that the loss of EPA’s reporting program could present problems — especially for companies hoping to sell their gas in the European Union.
EU complications
Starting in January 2027, E.U. gas importers will have to prove the supply they sell on the European market meets the bloc’s standards for monitoring, reporting and verification of methane leakage. Companies can show compliance with those standards at the corporate level, or exporting nations can secure an “equivalence determination” that covers all their producers.
The E.U. has never agreed to deem that all U.S. producers meet that “equivalency” threshold, even during the Biden era when the sector was covered by methane regulations and a fee on excess methane leakage.
The Biden administration tried to negotiate that, noted Fred Hutchison, president and CEO of LNG Allies, which promotes U.S. gas exports.
“They didn’t say yes, didn’t say no — it was right around the time of the election, and I think they wanted to see where the leaves fell off the trees,” he said. But with the greenhouse gas reporting program, along with state regulations, industry practices and outside certification programs, “it was sort of judged that you could patch together a reasonable case on country level equivalency.”
Now, those Biden-era methane controls are either gone or in the process of being rolled back. Meanwhile, the E.U. and authorities in its member states who will implement the new methane limits have been vague about their criteria for determining national “equivalence” or corporate compliance with the standards. Those policies may not be filled in until next year, and U.S. gas exporters — who supply about 45 percent of E.U.’s liquefied natural gas imports — are staring down possible restrictions beginning in 16 months’ time.
EPA’s proposal to stop reporting and data collection for oil and gas emissions can only make that more likely, experts say, because companies expected to be able to use that emissions database to demonstrate compliance.
“This completely shoots a hole in anyone who would be advocating for there to be equivalent before the Europeans,” said the oil and gas lobbyist.
To prove compliance with the E.U. policy, a company’s emissions data must be verified by a qualified third party. The loss of EPA’s database would likely prompt industry to look for certification elsewhere, experts said, not only to access European and other global markets, but to attract climate-conscious purchasers within the United States.
Bob Stout, senior adviser to the Natural Gas Innovation Network, said the industry could partner with energy experts in academia to create a high-quality voluntary database.
“If we don’t have a mandatory framework like Subpart W here, having those different credible and trusted stakeholders come together to say, ‘OK, here are the data. Here’s how we’re accounting for it,’ is going to be critical for its credibility internationally,” he said. “It’s in our interest even from a pure energy standpoint, setting aside the climate change concerns. We want a credible accounting system so that we can demonstrate the emissions characteristics of the gas that we’re selling around the world.”
Getting ahead of the curve
The E.U. methane requirements are set to take effect in the midst of a broader upheaval in global trade wrought by Trump’s tariff policies. Energy Secretary Chris Wright and Interior Secretary Doug Burgum spent last week in Europe pressing the European Commission and member countries to loosen methane regulations to ease the flow of U.S. gas onto the market.
“In this environment, where there’s further definition to be made regarding those rules, the U.S. government is pressuring various individual countries and the E.U. to relax or scrap them,” said Christopher Goncalves, chair of the energy and climate practice at consulting firm BRG.
“I just note — or observe — the synchronicity between this decision about the Subpart W data and the effort to get the Europeans to relax the requirements,” he added. “It’s sort of like saying, ‘We’re not going to be collecting this data anymore, and you shouldn’t be either.’”
Hutchison of LNG Allies said the only workable solution for U.S. producers and exporters would be for the E.U. to substantially amend its methane legislation.
“They simply did not take account of the complexity of our system and the enormous co-mingling and practical intraceability of our pathways,” he said.
E.U. gas importers are primarily responsible for demonstrating compliance with the standards, and they don’t produce the gas and may not have good information about its methane intensity.
Ben Cahill, an analyst at the University of Texas, Austin, said that was a complicating factor, and industry is seeking clarity from the European Commission and national-level authorities about how the standards would be implemented. But he said the the restrictions are unlikely to simply go away.
“It’s a law,” he said. “I mean, it’s legislation that’s been passed in the European Union. So, the question is: How can it be implemented in a practical way, so that it’s actually achievable for the industry to do what the European Commission wants? And I still believe it’s possible, but it’s going to require some clarity and simplification.”
EPA said last week that doing away with the greenhouse gas reporting rule would save the oil and gas industry $2.4 billion in compliance costs.
But Goncalves of BRG said removing the regulatory requirement wouldn’t prevent many oil and gas companies from devoting resources to finding and fixing leaks and tracking their emissions.
“Companies have been eager to get ahead of the curve to comply with European requirements, anticipate Asian requirements, and pursue [environmental, social and governance] and other things that the administration doesn’t like, but they’ve done it for a variety of reasons having to do with long-term thinking,” he said.
“They might stop doing it, but I think the people who have already committed and developed it as a commercial differentiator and corporate differentiator are likely to continue doing that,” he said.
Jean Chemnick can be reached on Signal at jchemnick.01.
