The European Union’s Methane Regulation (Regulation (EU) 2024/1787), which took effect on August 4, 2024, establishes a legal framework for the measurement, reporting, and verification (MRV) of methane emissions from imported oil, gas, and coal.

Beginning January 1, 2027, importers must ensure that all new contracts with third-party non-EU suppliers align with stringent EU MRV measures, significantly reshaping supply chain dynamics. In fact, while the regulation does not outright ban non-compliant imports, it imposes severe penalties that could have far-reaching implications for financial performance.

For exporters in third countries, the regulation offers the option to demonstrate compliance through regulatory equivalence, contingent upon their MRV measures meeting EU standards. The specifics of this equivalence will be outlined in forthcoming secondary legislation, adding another layer of complexity to international trade.

This regulation will have important geopolitical effects, especially for major suppliers like the United States and Algeria. The EU’s strict requirements could create challenges for existing supply chains, raising concerns about potential disruptions.