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March 28 – The Trump administration’s broad policy goal of achieving “energy dominance” may run into headwinds in the country’s largest export market, the European Union, due to new methane regulations.
While European Commission President Ursula von der Leyen has indicated that the EU may be willing to import more U.S. liquefied natural gas (LNG), in part to reduce the bloc’s trade deficit with the U.S., making this happen could get complicated.
First, many utilities in the EU are hesitant about signing long-term LNG contracts given the uncertainty about the region’s future gas demand and the price impact of the product’s expected supply growth in the coming years. Rapidly deteriorating political relations with Washington are also not helping.
Another complicating factor is the EU Methane Regulation that was adopted in August 2024. This framework established rules and obligations for companies operating in the EU related to monitoring, reporting, and verifying methane emissions as well as deterring and addressing methane leaks.
This framework did not emerge in a vacuum. A major effort has been underway globally to better measure and monitor methane emissions associated with fossil fuel production and transport, as illustrated by forums such as the Global Methane Pledge, the Oil and Gas
Methane Partnership, and the Oil and Gas Decarbonization Charter.
The U.S. was previously part of this movement. The Biden Administration adopted a set of measures, including a methane fee, to curtail so-called ‘fugitive’ methane emissions from oil and gas systems through the Inflation Reduction Act (IRA).
But the efforts in the U.S. are now facing headwinds in the early days of the Trump administration.
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EU’s increasing imports of U.S. LNG
PESSIMISTIC SCENARIO
Going into 2025, the optimistic view was that the framework installed by the previous administration could be amended to make sure that U.S. LNG exporters could benefit from looser rules in the U.S. while still being able to compete in the global marketplace with a supposedly superior product.
Unfortunately, early indications are that a more pessimistic scenario is playing out.
In February, the U.S. Senate repealed the aforementioned fee on excess fugitive methane emissions, though the outright elimination of these fees is proving more difficult due to other stipulations in the IRA.
More fundamentally, President Trump, in one of his executive orders, urged the Environmental Protection Agency (EPA) to challenge and possibly rescind the Agency’s 2009 endangerment finding, which concluded that six types of greenhouse gas emissions pose a threat to public health and welfare.
The EPA may face legal and scientific barriers if it tries to rescind this finding, as the EPA’s authority and obligations to regulate GHG emissions have been cemented in the Clean Air Act through the IRA. But even talk about a change of this magnitude is generating significant uncertainty among U.S. energy producers, especially LNG exporters who still need to comply with stricter environmental rules in Europe.
PATH FORWARD
So what is next for U.S. LNG? Global demand for natural gas is robust and likely to remain so for decades. And U.S. LNG companies, which tend to have a long-term focus given the lengthy lead time of their projects, are apt to look beyond the Trump administration and seek to abide by
European environmental standards to further cement their growing market share there.
It is notable that American companies have been among the few to constructively engage with Brussels to find a pragmatic path to implement the current methane rules.
However, U.S. natural gas supply chains are incredibly complex, and technologies to help detect and mitigate GHG emissions are by no means perfect. Consequently, improving the environmental footprint of U.S. LNG will be a long-term process.
And that process may now be severely disrupted, so it will likely come down to the industry itself to make progress, possibly in close collaboration with lawmakers and regulators in jurisdictions like the EU.
On the U.S. side, the LNG industry could push the Trump Administration to preserve the IRA’s tax credits for carbon capture and storage (CCUS) technology, which Secretary of Energy Chris Wright seems to support, as do many oil and gas companies. And natural gas producers and shippers could make it clear how disruptive, and thus counterproductive, it would be for the endangerment finding to be rescinded.
In a less constructive scenario, U.S. policymakers could mirror their counterparts in Qatar, who in December indicated to the European Commission that LNG exports would be halted if the country’s state-owned company were to be fined under the bloc’s corporate sustainability directive. The White House could also push back against the EU Methane Regulation or make it part of larger tariff negotiations.
U.S. gas producers, LNG exporters, and EU lawmakers have an interest in preventing a zero-sum showdown, but it remains unclear how they will navigate this unfamiliar energy landscape where, at least politically, the U.S. and EU are moving further apart.
(The views expressed here are those of Dr. Gautam Jain, a Senior Research Scholar at the Center on Global Energy Policy (CGEP) of Columbia University, and Dr. Tim Boersma, a consultant and a Fellow at CGEP.)
Writing by Dr. Gautam Jain and Dr. Tim Boersma; Editing by Anna Szymanski.
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