US oil and gas exporters have been warned that they face a further tightening of European anti-pollution rules despite energy’s exclusion from a swath of climate proposals introduced in Brussels last week. The European Commission’s new climate strategy, unveiled on Wednesday, confirmed that while steel, fertilisers and other imports could face taxes based on the carbon emitted in their production, oil and natural gas would initially be left out.
But relief among US exporters of liquefied natural gas — a super-chilled form of the fuel shipped internationally — would be misplaced, said analysts, given separate rules on methane, a greenhouse gas with up to 80 times the warming effect of C02, are expected in the coming months.
“LNG exporters largely won a reprieve in the EU package,” said Bob McNally, head of Rapidan Energy Group, a Washington energy consultancy, “but the commission is coming for them in methane regulations later this year”.
Soaring shale gas production in the past 15 years has made the US the world’s third-largest LNG exporter, behind Qatar and Australia. US exports to Europe hit about 26bn cubic metres last year, up tenfold since 2017, according to BP.
Touting its “freedom gas”, the US government argued that exports to Europe could break the continent’s heavy reliance on energy from Russia, a geopolitical rival, while earning considerable export revenue too.
But the US shale patch remains a large emitter of methane despite the Biden administration’s efforts to crack down on the pollution.