FuelsEurope statement on the implementation of the Regulation (EU) 2024/1787

The cosignatories call on Member States to urgently mandate the European Commission to postpone the entry into force of Regulation (EU) 2024/1787 importer requirements. The postponement should allow the Commission to assess the impact on security of supply and competitiveness of EU industry, and to present targeted amendments with a view to improve the operational effectiveness, feasibility and efficiency of the requirements. The Commission should take into account assessment and practical inputs already shared by Member States and stakeholders. While Commission Recommendations are welcomed, they cannot substitute for legal certainty where binding compliance obligations are concerned.

Context:

For several year, the industry has engaged efforts to reduce methane emissions, as demonstrated by the participation of many of the cosignatories Member Companies in the OGMP 2.0 initiative to monitor and reduce such emissions.

Despite these ongoing efforts, the requirements under the EUMR, in particular the MRV equivalence required by Article 28, entering into force on 1 January 2027, cannot be achieved yet.

A recent study1 published by Wood Mackenzie demonstrates that the current design of the Regulation could exclude up to 87% of crude oil and 43% of gas volumes currently imported into the EU.

In the current geopolitical context, introducing additional supply constraints on crude oil and natural gas supply options for the EU would limit operational flexibility, increase the cost of compliant molecules and create avoidable strategic risks.

If the requirements, as currently expressed, were to be implemented from 1 January 2027, this would lead to imports restrictions and to a reduction in refining activity in Europe, equivalent to the shutdown of around half of its capacity (approximately 40 sites). The impact is particularly pronounced for crude oil, as refinery operations are optimised for specific crude grades and blends. Any disruption in supply can therefore reduce processing capacity, efficiency and operational flexibility, resulting in a sharp rise in fuel and energy prices; this would also increase dependence on refined products produced outside the EU, which are not subject to the same environmental standards of the Methane Regulation.

Operational issues on compliance and traceability to be addressed:

• The use of certification, as proposed by industry, is not yet clearly defined nor fully operational at global scale. Although the Commission is developing recommendations, establishing certification schemes and controls (such as audits) will take time to be largely available across exporting countries.
• Importers often cannot identify the original producer because supply chains are complex and products are traded multiple times, including through trading hubs and portfolios.
• The current design and timeline of the Methane Emissions Regulation create a genuine practical enforceability issue for crude oil importers, as they impose obligations whose fulfilment depends on third countries and producers over whom EU importers have neither control nor effective influence. A majority of oil producers in third countries are unlikely to meet the equivalency requirements in due time.

In order to fully implement the EUMR, it is necessary to develop recognised verification rules and protocols, as well as to train accredited methane experts, so that verification can be carried out effectively and the risk of fraud can be prevented.

Recommendation limitations:

The European Commission initiative to publish Recommendations providing further guidance and temporary solutions to Member States, such as the introduction of a grace period on the enforcement of sanctions, does not provide legal certainty required by crude oil and natural gas importers:

• Recommendations cannot substitute for legal certainty where binding compliance obligations are concerned;
• Third-parties can legally challenge penalty suspension against the primary legislation – which envisages proportionate, dissuasive and effective penalties for non-compliance;
• Importers and operators need a credible way to comply with the Regulation – penalties suspension does not resolve non-compliance, and leaves operators exposed to litigation and reputational risk;
• Recommendations are not legally binding – they cannot ensure consistent implementation across all Member States, therefore risking fragmented implementation, overlapping requirements, and additional uncertainty for importers;
• Uncertainty around penalty schemes is already discouraging deliveries to the EU beyond the 1st of January 2027. It prevents from concluding supply contracts with extra-EU suppliers without risking non-compliance with the upcoming EUMR provisions.

In this context, Member States have a critical role in ensuring that the implementation of the Regulation does not undermine EU energy security or industrial competitiveness and should mandate the European Commission, without delay, to postpone the entry in force of importers requirements, while revising the Regulation through targeted amendments in view to enable effective operational implementation as soon as possible.