EUROPEAN COMMISSION Brussels, 15.12.2021 SWD(2021) 459 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT REPORT

Accompanying the Proposal for a Regulation of the European Parliament and of the Council on methane emissions reduction in the energy sector and amending Regulation (EU) 2019/942 {COM(2021) 805 final} - {SEC(2021) 432 final} - {SWD(2021) 460 final}



Table of Contents 1.Introduction: Political and legal context 2.Problem definition 2.1.What are the problems? 2.2.What are the problem drivers? 2.3.How will the problem evolve? 3.Why should the EU act? 3.1.Legal basis 3.2.Subsidiarity: Necessity of EU action 3.3.Subsidiarity: Added value of EU action 4.Objectives: What is to be achieved? 4.1.General objectives 4.2.Specific objectives 5.What are the available policy options? 5.1.What is the baseline from which options are assessed? 5.2.Description of the policy options 6.What are the impacts of the policy options? 6.1.Policy area 1: Improving measuring and reporting of methane emissions in the EU 6.2Policy area 2 - Mitigation of methane emissions in the EU

6.3Policy area 3 – Measuring, reporting and mitigating methane emissions linked to EU fossil fuel consumption but occurring outside the EU 7.How do the options compare? 8.Preferred option 9.How will actual impacts be monitored and evaluated? Annex 1: Procedural information Annex 2: Stakeholder consultation Annex 3: List of actions in the Methane Strategy Annex 4: Analytical methods Annex 5: Who is affected and how? Annex 6: Note on linkages Annex 7: Methane emissions data from greenhouse gas inventories Annex 8: Discarded Option Glossary Term or acronym Meaning or definition AMM Abandoned mine methane BAU Business as usual CCAC Climate and Clean Air Coalition CEER Council of European Energy Regulators CH4 Methane CMM Coalmine methane CTP Climate Target Plan DSO Distribution System Operator E-PRTR European Pollutant Release and Transfer Register ESR Effort Sharing Regulation EU European Union GAINS Greenhouse Gas - Air Pollution Interactions and Synergies model GHG Greenhouse gases IA Impact assessment IEA International Energy Agency IED Industrial Emissions Directive IMEO International Methane Emissions Observatory IPCC Intergovernmental Panel on Climate Change IPIECA International Petroleum Industry Environmental Conservation Association KT Kiloton LDAR Leak Detection and Repair LNG Liquefied Natural Gas MRV Measurement, Reporting, and Verification MSI Methane Supply Index OPC Open Public Consultation UNEP United Nations Environmental Programme VAM Ventilation air methane WTO World Trade Organization 1.Introduction: Political and legal context The European Green Deal puts the EU on a path to climate neutrality by 2050 through the deep decarbonisation of all sectors of the economy, in line with the Paris Agreement goal of keeping global temperature increases well below 2°C and pursuing efforts to limit the increase to 1.5°C. The Regulation establishing the framework for achieving climate neutrality (‘European Climate Law’) made the EU’s climate neutrality target by 2050 legally binding, and raised the 2030 ambition, requiring a domestic reduction of net greenhouse gas emissions (emissions after deduction of removals) by at least 55% compared to 1990 levels by 2030. To this end, the Commission is focusing on overhauling the relevant climate and energy legislation to align with the target set out in the Climate Target Plan to reduce greenhouse gas (GHG) emissions by at least 55% by 2030 compared to 1990 levels. While much of the focus of the public discussion has so far been on carbon dioxide emissions, short-lived GHGs such as methane contribute significantly to overall GHG emissions. This contribution is receiving increasing attention, as recognised in the Sixth Physical Science Basis Report of the Intergovernmental Panel on Climate Change, which finds that global warming could be limited by “strong, rapid and sustained reductions in CH4 emissions” . The 2030 Climate Target Plan (CTP) has highlighted methane emissions abatement as a cost-effective way of cutting GHG emissions in the EU. All 2030 CTP and Fit for 55 mitigation scenarios achieving at least 55% GHG reductions include abatement potential for EU methane emissions at low costs. The CTP IA further indicates that a significant part of such reductions stems from the energy system, and this is also further recognised by stakeholders and by international studies , . The European Green Deal Communication indicates that the decarbonisation of the gas sector will be facilitated, including by addressing the issue of energy-related methane emissions. It also calls on the EU to engage with third countries on cross-cutting climate and environment issues, including via action to reduce methane emissions. In addition, and in response to the request expressed in Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action (the Governance Regulation) , the Commission adopted an EU strategy to reduce methane emissions (‘the Methane Strategy’) in October 2020 .

The Methane Strategy announces a list of 17 actions across the agriculture, waste and wastewater, and energy sectors, as well as seven international actions . See Box 1 for those most relevant to this initiative. Box 1. Relevant actions in the methane strategy ·The Commission will deliver legislative proposals in 2021 on: oCompulsory measurement, reporting, and verification (MRV) for all energy-related methane emissions, building on the Oil and Gas Methane Partnership (OGMP 2.0) methodology. oObligation to improve leak detection and repair (LDAR) of leaks on all fossil gas infrastructure, as well as any other infrastructure that produces, transports or uses fossil gas, including as a feedstock. ·The Commission will consider legislation on eliminating routine venting and flaring in the energy sector covering the full supply chain, up to the point of production. ·As part of the EU’s diplomatic and external relations action, the Commission will address methane emission reductions in all relevant sectors with partner countries and promote global coordination of efforts to address energy-sector methane emissions. ·The Commission will support the establishment of a detection-and-alert process for methane super-emitters using EU satellite capability, and share this information internationally through the foreseen international methane emissions observatory. 2.Problem definition 2.1.What are the problems? Methane is a powerful greenhouse gas, second only to carbon dioxide in its overall contribution to climate change and responsible for about one third of current climate warming . Although it remains in the atmosphere for a shorter period of time than CO2 (10-12 years compared to hundreds of years), on a molecular level, methane is a far more powerful climate forcer (with a GWP of 28 times that of CO2 over 100 years and a GWP of 86 over 20 years). In addition to the significant short-term effect on the climate, methane contributes to ozone formation, which is a potent local air pollutant that causes serious health problems, before oxidizing into carbon dioxide that continues to trap heat and affect the climate for a much longer time-frame. During their 10-12-year atmospheric lifetime, methane emissions originating from one country disperse and affect others, causing - in addition to their global warming effect illnesses, premature deaths, and losses in agricultural harvests not only at the point of origin but on a much wider geographical scope,. The global mean methane concentration in the atmosphere has risen sharply over the last decade. In 2019, concentrations of methane were higher than at any time in at least 800,000 years , and 2020 exhibited the fastest growth rate in the 37-year record maintained by the National Oceanic and Atmospheric Administration (NOAA) . Correspondingly, reductions in methane emissions can have positive near-term effects in reducing the rate of global warming as well as air quality benefits. According to recent estimates, global methane emission reductions of 45% by 2030, based on available targeted measures and additional measures in line with UN priority development goals, could avoid 0.3°C of global warming by the 2040s . Relevance of the energy sector Approximately 40% of global methane emissions are thought to come from natural sources (biogenic), like wetlands or wildfires . The remaining 60% are anthropogenic, of which the largest sources, based on estimations, are agriculture (around half of total anthropogenic methane emissions) – in particular linked to intensive production – fossil fuel production and use (between a fourth and a third), and waste (around a quarter) . In the EU, around half of anthropogenic methane emissions are estimated to come from agriculture, a quarter from waste and a fifth from energy . This distribution across sectors only takes into account domestic emissions, and given that the EU currently imports more than 90% of the fossil fuels consumed in the EU, would change drastically if emissions occurring outside of EU borders, but associated with EU fossil energy consumption were to be taken into account. A large portion of the methane emissions linked to EU fossil energy consumption is deemed to occur during the production phase of that energy, as well as along its transmission phase (especially in the context of fossil gas) to the EU. Some estimations have been carried out of the magnitude of such methane emissions (specifically linked to EU consumption but occurring outside the EU). One such estimation is for fossil gas and it concludes that, depending on the methodology employed, results can vary widely – from an order of magnitude of between 3 to 8 times the level of methane emissions from the fossil gas value chain occurring within the EU borders , . The IEA estimates that in 2020, methane emissions associated with imported oil and gas to the EU represented around 9,000 kilotonnes of methane. This compares to 1,033 kilotonnes of methane emissions from oil and gas estimated to have occurred in 2019 in the EU. While the share of total global man-made methane emissions emitted in Europe is estimated to be around 6% , the consumption of, and import dependency for, fossil fuels produced outside the EU hence adds significant levels of methane emissions that are incurred because of consumption within the EU. Emissions from the waste sector are covered by existing and upcoming planned reviews of environmental legislation. For the agriculture sector, a number of challenges are addressed in the ‘Farm to Fork’ strategy. The energy sector currently offers the most cost-effective methane emissions savings potential. Emission estimates As party to the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, the Union is required to provide annually an inventory report of anthropogenic greenhouse gas emissions constituting an aggregate of the member States national greenhouse gas inventories, prepared using good practice methodologies accepted by the Intergovernmental Panel on Climate Change (IPCC).. The EU emissions data used in this report are taken from that EU inventory report, which represents a compilation of national inventories, based on the emissions reported by EU Member States under the EU Climate Monitoring Mechanism Regulation, followed by the integrated reporting system of the Governance Regulation. The Governance Regulation requires Member States to establish national inventory systems to estimate anthropogenic emissions of GHGs and to report their national projections. This reporting is done using IPCC guidelines, and is often based on default emission factors rather than direct source-level measurements, implying uncertainties regarding the precise origin, frequency and magnitude of emissions and was deemed to be significantly underestimated by certain studies , see further section 2.2.1.

In the most recent EU GHG inventory submission to UNFCCC , methane emissions in the EU energy sector are estimated at 3.1 million tonnes (see Annex 7 for more detailed data) . Table 1: Split of energy-related methane emissions per sub-sector in the EU as reported to the UNFCCC in the April 2021 GHG Inventory Submissions (2019 data) EU energy-related CH4 emissions Category Kt CH4 Share Incomplete combustion of fuels 974 31% Coal 1002 32% Leaks from oil 44 1% Leaks from fossil gas 847 27% Venting and flaring from oil 118 4% Venting and flaring from fossil gas 24 1% Biogas 75 2% Other 32 1% Total 3116 100% Figure 1: Split of energy-related methane emissions in the EU as reported to the UNFCCC in the April 2021 GHG Inventory Submissions (2019 data) Based on the estimates contained in the 2021 GHG Inventory Submissions and keeping the limitations of this data in mind, more than half of the around 70% of all direct energy sector emissions within the EU is estimated to come from unintentional releases . Coal mining is estimated to be responsible for 32% of EU energy sector methane emissions, composed of 24 percentage points (pp) from ongoing mining activities (which are intentional emissions) and 8pp from abandoned mines. Fossil gas represents 28% of the methane emissions, of which 27pp are estimated to be from leaks and 1pp from intentional emissions of methane into the atmosphere. For oil, leaks represent 1% of overall estimated energy emissions, and intentional releases another 1%. A split of reported fugitive emissions by Member States and reporting category per fuel is available in Appendix 6. The data further highlights the generally high share of fugitive methane emissions among total reported energy sector emissions across most Member States (see Figure 2). 2.2.What are the problem drivers? Reductions of methane emissions in the energy sector are hindered by the following challenges and problem drivers, which will be discussed below: 1)A lack of precise information on emission sources and quantities. 2)Lack of sufficient incentives to mitigate planned and unplanned methane emissions. 3)Lack of information on and mitigation of methane emissions occurring outside the EU but linked to consumption of fossil energy in the EU. The first two problem drivers specifically address the situation with respect to methane emissions within the EU, while the third driver describes the mechanisms hindering the reduction of emissions linked to EU imports.

2.2.1.No precise information on emission sources and quantities Whereas CO2 emissions typically occur during the combustion of fuels or during industrial processes at well-identified points - thus with clear emission sources and comparably straight forward measurement options - methane emissions are often diffuse, can occur along the entire supply chain, and are as a result more difficult to measure and accurately quantify, leading to substantial uncertainty about current emissions levels. The lack of availability of precise data and identification of the magnitude of the various sources of emissions is the key challenge to the abatement of those emissions. Current means of methane emission quantification are primarily based on estimation rather than direct measurement and are fragmented across sectors and Member States. When operators do not have precise knowledge on their emissions, e.g. in the case of unintentional fugitive emissions through leaks, action to mitigate such emissions is commonly driven principally by safety considerations. The lack of an accurate data basis hinders the development and implementation of measures for the mitigation of methane emissions in the energy sector. This is widely recognised among experts, and it is a key premise of the voluntary Oil and Gas Methane Partnership on measuring and reporting of methane emissions by companies (see further Section 2.3.2). A lack of information also implies limited possibilities for competent authorities and civil society to engage with the issue. Especially in the case of intentional releases of methane emissions, a lack of data accessibility adds a problem of information asymmetry between polluters and society. With technological improvements over recent years, such as increasing satellite observation capacities and availability of specialised cameras, recent international studies by commercial companies, NGOs and academia have identified and brought to public attention significant emission events and super-emitters around the globe , as well as highlighted substantial discrepancies between reported and observed emissions . Country data reported pursuant to UNFCCC Reporting Guidelines is submitted to the UNFCCC secretariat according to different tiers of reporting, and it is recommended to use higher tier levels of accuracy for estimating emission sources that have a large contribution to total emissions in a country (e.g. those sources falling within 95% of total emissions). A tier represents a level of methodological complexity. Three tiers are available (see box). Progressing from tier 1 to tier 3 represents an increase in the certainty of methane estimates . Box 2. UNFCCC GHG emissions reporting tiers (UNFCCC Resource Guide) Different methods can be used to estimate emissions or removals from most source and sink categories. The selection of a particular method will depend on the desired degree of estimation detail, the availability of activity data and emission factors, and the financial and human resources available to complete the inventory. In IPCC terminology, the lowest ranking or simplest method is “Tier 1”, while more elaborate methods are “Tier 2” and “Tier 3.” Tier 1 methods typically utilise IPCC default emission factors and require the most basic, and least disaggregated, activity data. Higher tiers usually utilise more elaborate methods and source-specific, technology-specific, region-specific and/or country-specific emission factors, which are often based on measurements, and normally require more highly disaggregated activity data. Tier 2 and 3 methods require more detailed data and/or measurements for their application. Specifically, tier 2 requires country-specific, instead of default, emission factors to be used while tier 3 requires plant-by-plant data or measurements and comprises the application of a rigorous bottom-up assessment by source type at the individual facility level. In cases where a national methodology exists, which is consistent with the IPCC Guidelines, it is highly advisable to use the national methodology. This methodology should be fully documented in order to allow the reader to understand why this particular method is better than the default one proposed by the IPCC. There are however no mandatory requirements to report direct source-level measurements as part of the national inventories reporting requirements. The UNFCCC does not require their submission, as reporting at tier 2 level for large emission sources is in line with IPCC guidelines as tier 2 is considered a higher tier method. Estimation methodologies and reporting of methane emissions hence varies across Member States, and a significant share of methane emissions in the EU energy sector, i.e. those estimated using default methods, are arguably less accurate than other emission categories estimated using higher tier methods. The use of default emission factors means that the estimated emissions are less representative of national circumstances, and therefore less accurate, and may for each specific case underestimate or overestimate actual emissions for those categories. Note that the uncertainty about the size and direction of bias in the estimation of emissions from specific sources using emission factors makes any correlation between the use of methodology and accuracy of reported emissions difficult. ·For coal mining, most Member States report their methane emissions at tier 1 or tier 2 levels. While a few Member States’ reporting for operating mines is also done at level 3, this is not the case for emissions from non-operating or abandoned mines, all emissions for which are either estimated using tier 1 or tier 2 methodologies. ·For fugitive emissions from the gas sector, the large majority comes from gas transmission, distribution or storage, and methane emissions estimation approaches in those sub-sectors vary greatly among Member States. For transmission and storage, a few Member States use very detailed tier 2 or 3 approaches (Belgium, Germany, Finland, Latvia, the Netherlands, Austria, and Sweden) and others (eleven Member States) use only a tier 1 approach. For distribution, almost half of Member States use a tier 1 approach or do not report methane emissions from this source. Other Member States use approaches that are more detailed, although the most commonly used is the tier 2 approach. ·For oil emissions, the largest source of which is from production and processing, the majority of EU countries apply a tier 1 method for estimating methane emissions . For methane emissions occurring outside of the EU but specifically linked to fossil energy consumed in the EU, not all countries exporting fossil fuels to the EU submit inventories to the UNFCCC (see further Section 2.2.3), and for those that do, data quality is dependent on the methodologies used. Data is also not disaggregated according to domestic use and exports in the greenhouse gas inventories submitted to UNFCCC. The consequence is that there is no precise knowledge, nor any robust estimations, of either the magnitude, origin or nature of methane emissions resulting from EU consumption but occurring outside the EU territory. 2.2.2.Lack of sufficient incentives to mitigate planned and unplanned methane emissions. The lack of accurate information on the extent and the sources of emissions are a significant barrier to public and private business awareness of the origin and effects of methane emissions and to tackling them. Furthermore, there is a substantial market failure in the form of negative externalities associated with methane emissions not being fully internalised by polluters, but costs accruing to societies at large in coping with climate warming effects as well as direct health and economic impacts. Section 6 will provide further details on the significant difference between the relatively low costs of a large share of methane emission abatement possible via specific measures in the sub-sectors included in the scope of this report and the costs to society of methane emissions. The resulting lack of information may equally imply a lack of awareness by polluters themselves, leading to inefficient allocation of resources from the point of view of GHG emission abatement. Even in cases when operators have good awareness of their emissions, the market failure of a lack of internalisation of the costs of the environmental externalities impedes incentives for operators to address the issues. Operators have two principal incentives to curb methane emissions: first, methane has heating and energetic, and therefore economic, value; second, methane is extremely flammable and may explode if it comes into contact with a heat source. These characteristics explain why, traditionally, the choice of abatement of methane emissions in the energy sector has been the result of net cost/risk trade-offs, without taking much else into consideration. As long as environmental considerations are not given sufficient relevance in this trade-off due to a lack of internalisation of the costs of the externalities of methane emissions, even cost-effective abatement measures may not be undertaken if other investments are prioritised for private returns. However, even if economic considerations are a key factor in the decisions taken by operators to abate their methane emissions, there may be reasons why they do not undertake all the abatement that is cost effective from their perspective, even if they have that information. Operators may choose to abate only the emissions that are necessary to avoid for safety considerations, allowing other methane emissions to continue even if they would be cost effective to abate. This might be due to the fact that even cost effective abatement will require upfront investment, while returns will accrue at a later stage. Operators may consider that if risk to safety is low, such investments should be expanded elsewhere, on other projects which are also cost effective. In such cases, operators will typically base their abatement decisions, taking into account risk to safety, on the size of methane losses. Small losses, such as from small leaks, might not be repaired even if this could be done at low cost. This might well be sub-optimal from an environmental perspective, as small losses might amount to large losses over a certain period of time. Indeed, as long as environmental considerations are not given sufficient relevance in the above trade-off due to a lack of internalisation of the costs of the externalities of methane emissions, even cost-effective abatement measures are not undertaken if other investments are prioritised instead. As projections of methane emission reductions in the EU energy sector reveal (more details in section 6.2), a business as usual scenario will not achieve all possible economically or socially/environmentally cost effective abatement, and large amounts of additional methane emission abatement (on top of the baseline) are possible in the sectors included in the scope of this report, a significant share of which can be achieved at negative to zero net costs . In addition, operators have different approaches to assessing safety risk, especially in the case of inexistent or non-prescriptive national regulations. Safety risk needs to be properly considered in any measures to be adopted with the aim to further reduce methane emissions in the energy sector, not only to ensure a homogenous approach among operators but also to ensure that such measures do not lead to unintended consequences with regards to safety. This is something which is considered in further detail in section 5.2.3 where the approach taken in the options which include measures on leak detection and repair and on venting and flaring are described in detail.

Independent of the continued consumption of fossil energy carriers in the coming decades (see Section 5.1), the need for methane emission monitoring and abatement is also required once production has halted. For the coal sector in particular, methane emissions remain an important issue once mining operations are terminated, as mines can continue to emit methane for decades after operations have stopped . Similar concerns surround non-operating oil and gas production sites, e.g. in the case of abandoned boreholes and well-heads . Methane emissions are included in the scope of the union greenhouse gas reduction targets for 2030 set out in the European Climate Law and the binding national emission reduction targets under Regulation (EU) 2018/842 . However, there is currently no Union level legal framework setting out specific measures for the reduction of methane emissions occurring at the level of upstream oil and fossil gas exploration and production, fossil gas gathering and processing, transmission, distribution, underground storage and liquid fossil gas (LNG) terminals, operating underground and surface coalmines, closed and abandoned underground coal mines. More specifically (see also Table 2): ·The EU Emissions Trading System (EU ETS) does not presently regulate methane-emitting activities due to their diffuse nature and the associated challenges of monitoring and reporting of leakage at individual installation level. This is a necessary requirement before methane-emitting activities could be included in the EU ETS. ·Methane is included in the current Effort Sharing Regulation (ESR) and maintained in the proposal for revision adopted on 14 July 2021, which contains binding annual greenhouse gas emission targets at country level for Member States from 2021 to 2030 for sectors including transport (without aviation), buildings, agriculture, non-EU ETS industry, waste and parts of the energy sector. The ESR does not include sectoral measures or targets and Member States have the flexibility to decide how to achieve the required mitigation across sectors and different greenhouse gases. As such, it does not contain any general or sector-specific requirements or tools for its implementation, and thus does not provide specific incentives for companies in the sectors within the scope of this present proposal (coal, oil upstream, gas upstream, midstream and downstream - LNG, gas storage, transmission and distribution) to cut down their methane emissions. Taking this into account, further action will be complementary to the ESR and will facilitate achieving the targets set out under the ESR. Specific action in the energy sector is warranted for a number of reasons (further detailed and explained in this section and in section 6): oThe persistence of large amounts of methane emissions in the energy sector within the EU; oThe projection of large amounts of additional methane emission abatement on top of the baseline that are possible in the sectors included in the scope of this report, a significant share of which can be achieved at negative to zero net costs; oThe absence of such specific measures in a large number of EU Member States and the fact that EU action via specific measures to curb methane emissions in the energy sector will help Member States to achieve their ESR targets and can also contribute to increasing the cost-effectiveness of achieving those targets due to the trading potential in the ESR between Member States; oOther than specific EU measures to further mitigate methane emissions, this report assesses options to achieve better and more accurate information on the origin, magnitude and nature of methane emissions in those sectors. This will incentivise operators to have a better understanding of their methane emissions, thereby allowing them to achieve further effective abatement of their emissions and in so doing, will further help EU Member States fulfil their ESR targets. ·Methane is included in the Industrial Emissions Directive (IED) which regulates pollutant emissions from industrial installations. It requires installations undertaking certain industrial activities to operate in accordance with a permit and conditions which include emission limit values based on best available techniques. The scope of the IED however excludes all fossil gas upstream, mid and downstream (LNG, underground gas storage, transmission, distribution), oil upstream as well as coal mining/extraction. The scope of the IED covers only methane emissions from the refining of mineral oil and gas, which are not covered by this initiative. Thus every sub-sector within the scope of this report (oil and gas production, LNG, underground gas storage, transmission, distribution and coal mining) is not covered by the IED. The ongoing revision of the IED will take into account the sub-sectors included in this proposal with a view to avoid double regulation and to ensure that this proposal is complementary to the IED. ·Methane emissions occurring in space heating and cooling appliances (included in inventories as part of what we term indirect emissions) are covered in several Ecodesign and Energy Labelling regulations , which provide rules for improving the environmental performance of products, such as household appliances, information and communication technologies or engineering. The Ecodesign Directive sets out minimum mandatory requirements for the energy efficiency of these products. The Energy Labelling Regulation complements ecodesign requirements with mandatory labelling requirements for the information of consumers. ·The European Pollutant Release and Transfer Register (E-PRTR) contains data reported by individual industrial facilities above a certain size threshold to their national authority on the quantities of pollutants released into the air, water and land within the EU territory.While it includes methane among the pollutants covered, its limitation to individual facilities and certain activities does not provide the necessary scope along the full energy supply chain; it does not cover all fossil gas upstream, mid and downstream (LNG, underground gas storage, transmission, distribution) as well as coal mining/extraction. The above clearly demonstrates a lack of appropriate incentives and regulatory framework for the mitigation of methane emissions in key methane emitting energy sub-sectors (see also Annex 6 for more details). There are a number of voluntary initiatives covering the oil and gas sectors, among which: ·The Oil and Gas Methane Partnership (OGMP) voluntary initiative on measuring and reporting of methane emissions . ·The Oil and Gas Climate Initiative (OGCI) partner companies have committed to reducing the collective average methane intensity of their aggregated upstream oil & gas operations to below 0.25 % by 2025 (from a baseline of 0.32 % in 2017), with an ambition to achieve a level of 0.2 %. ·The Methane Guiding Principles, which is focused on areas of action to reduce methane emissions in the oil and gas sector, notably via its best practice guides, designed to help oil and gas companies develop methane management plans. ·The Global Methane Alliance, with the aim to significantly reduce methane emissions in the oil and gas sector by 2030. ·GIE/MARCOGAZ have published a number of reports and guides advising the fossil gas industry on measures to reduce its methane emission reductions. A number of oil and gas companies have also voluntarily committed to methane emission reduction targets. In and of themselves voluntary initiatives are, however, unlikely to provide sufficient sectoral coverage, transparency, and enforceability (see further Section 2.3.2). For instance, even the currently most ambitious voluntary initiative on MRV of the Oil and Gas Methane Partnership (OGMP) only covers around 30% of the world’s oil and gas production.

In April 2021, Member States were requested through the Council Working Party on Energy to provide information on the regulatory framework on methane emission monitoring and mitigation in their respective jurisdictions. Unfortunately, no direct feedback to this request was received by September 2021. A few submissions by Member States containing information on national rules were received for the open public consultation. With this basis, constraints of capacity and time prevent a complete overview of rules in place in Member States. Surveys conducted by GIE-MARCOGAZ among their members on the Commission’s request on LDAR and venting & flaring, respectively, portray a picture of often non-existing or insufficient rules in place, and substantial divergence in scope and granularity of rules across Member States. The results of the surveys are further discussed in the relevant Sections 2.2.2.i and 2.2.2.ii below. Whilst the overall market failure of a lack of internalisation of externalities is relevant regardless of origin, precise scope for mitigation, and current regulatory treatment across Member States, the lack of incentives to mitigate methane emissions needs to be considered differentially for unintentional and intentional releases of methane and across sectors. Table 2: Overview of existing EU legislation and voluntary initiatives covering methane emissions Methane in scope Emission reporting requirement/Level of emission reporting Mitigation requirement/Description of type of requirement Directly applicable provisions on specific mitigation measures Sectoral coverage Industry coverage LDAR Venting Flaring Oil or gas production, gas transmission, oil or gas storage, LNG, gas distribution. End-use Oil Gas Coal EU legislation ETS No None None No No No No No No No ESR Yes Yes/ Member State level** Overall GHG reduction target but no specific CH4 targets *** No No No Yes Yes Yes Yes IED Yes Yes/ Installation level Permits and BATs, applies to large industrial installations No No No No † No † No Yes Eco design Yes None Emission limits by design No No No No No No Yes†† E-PRTR Yes Yes/ Facility level None No No No No No* Yes Yes Voluntary initiatives Oil & Gas Methane Partnership Yes Yes/ up to facility level None No No No Yes Yes No No 30% of global oil and gas production Global Gas Flaring Reduction Partnership Yes None Ban No No Yes Yes No No No 40% Zero Routine Flaring by 2030 Initiative Yes Yes/ Member State or Ban No No Yes Yes No No No 60% of global gas flared Oil and Gas Climate Initiative Yes Company (asset based) Intensity target No No No Yes ††† Yes ††† No No 32% of global oil and gas production * includes LNG terminals ** through Reg 525/2013: monitoring and reporting greenhouse gas emissions *** the ESR emissions target is for GHG overall, no specific sub-target for methane is set. † Note that the IED includes the category of refining of mineral oil and gas †† specifically applicable for specific end-use product categories, e.g. solid fuel local space heaters ††† Upstream operations only 2.2.2.1.Unintentional release of methane More than half of all direct energy sector methane emissions is estimated to come from unintentional release of emissions into the atmosphere (see Section 2.1 Emission estimates). The countries reporting the highest methane emission estimates in the energy sector are Poland, Germany, Romania, Italy, Czech Republic, and Hungary , all of which have a ratio of fugitive emissions above 50% of total reported energy sector methane emissions (see Figure 2). In the case of oil and gas, the largest proportion of methane emissions in the EU is estimated to come from leaks from various points along the supply chain . Leaks can occur during drilling, extraction as well as processing, storage, transmission and distribution to end-use consumers . Some emissions can result from imperfections in, or ordinary wear and tear of, technical components such as joints, flanges and valves, among others, or damaged components, e.g. in case of accidents. Corrosion or damage can also cause leaks from the walls of pressurised equipment . Methane emissions from leaks are most commonly reduced by periodic Leak Detection and Repair (LDAR) surveys/programs that comprise inspections to identify leaks followed by repair . LDAR programmes are traditionally driven by safety considerations . However, leak detection practices, frequencies, type and granularity of assets covered and hence effectiveness of LDAR as well as efforts to quantify fugitive emissions vary widely across Member States. Lack of detection and quantification of emissions from leaks further contributes to the uncertainty surrounding estimates of methane emissions in the fossil fuel supply chain discussed under section 2.2.1 . A lack of mitigation of emissions from leaks contributes to continued and increasing emissions where small leaks are left to develop into large leaks . In the EU, legislation on LDAR exists only at the national level in a few Member States. A survey conducted among mid and downstream gas companies by GIE-MARCOGAZ on request of the Commission returned responses from companies operating in 18 Member States. Of those 18, 13 were identified as having some form of rules on leak detection in place, and five as not having any binding rules. Among the 13 countries indicated to have rules in place, respondents described the legal nature of the rules to differ. Some Member States adopted specific regulations (e.g. Belgium, France, Greece), and in others rules are stipulated by the National Regulatory Authority (e.g. Italy, Romania). The scope of the rules varies, with responses indicating divergence in coverage from distribution networks only, to including transmission networks as well as storage facilities. Asked whether respondents to the survey quantified emissions from leaks, six out of eleven DSOs and ten out of 29 TSOs indicated that they do not. For those having indicated that quantification of leaks takes place, this does not necessarily mean that all leaks are quantified . At the global level, some voluntary initiatives and best practices have emerged, notably the United Nations Economic Commission for Europe (UNECE) best practice guidance for effective methane management in the oil and gas sector and the Methane Guiding Principles LDAR guide . While the private sector has developed voluntary initiatives to measure and reduce emissions from fugitive methane leaks in the gas industry, they remain fragmented along the value chain and lack harmonisation . According to the IEA, while a number of companies already undertake LDAR, the frequency, practices and rigour of programmes still vary widely within the industry . 2.2.2.2.Intentional release of methane Aside from fugitive emissions and incomplete combustion, all other emissions in the EU energy sector stem from intentional releases of methane, including from venting, flaring, and the use of equipment that emits (‘bleeds’) as part of its normal operation. Flaring is the process of burning associated, unwanted or excess gases and liquids released during normal or unplanned processes. Venting is the process of directly releasing gasses into the atmosphere, often for the same reasons, or as part of equipment design. Excess gasses in oil, gas and coal production can be a safety hazard and must therefore be processed, either by trapping, utilisation, or by flaring or venting. While vented and flared gas implies the destruction of a valuable commodity, depending on the sector and part of the supply chain, operators may not have the right incentives to avoid emitting methane in those ways. As discussed above, methane abatement decisions by energy companies are often undertaken on the basis principally of cost effectiveness and safety risk considerations, not for social or environmental reasons. Other missing incentives may include the lack of attribution of responsibility for emissions to specific operators, the lack of available infrastructure to bring associated gas to market, or the lack of awareness or incentives in using the available mitigation measures – as indicated by the availability of cost effective measures that are not being implemented (for further details see section 6.2) . Further downstream, emissions are often linked to venting events with typically smaller emission quantities from individual sources. Avoidance or recovery per unit can be more difficult and costly under such circumstances. a)Venting and flaring in the oil and gas sectors

Of the total 3.1 million tonnes of methane emissions within the EU reported in the April 2021 EU GHG Inventory Submissions to the UNFCCC, venting in the oil and fossil gas sectors accounted for respectively 57 kilotonnes (kt) and 15 kt of methane. Flaring in the oil sector contributed 61 kt and flaring of fossil gas 9 kt of methane emissions. On a global level, and in relation to energy imported and consumed in the EU, venting and flaring are a much larger issue. The World Bank estimates that 140 bcm (118 Mtoe) of gas – equivalent to about a third of the EU’s gas consumption – are flared each year , and recently developed the Imported Flare Gas Index highlighting the exposure of oil importing countries to gas flaring . The motivation behind flaring and venting activities can differ depending on whether they occur as part of routine operations, in exceptional circumstances, or for safety reasons with substantial uncertainty surrounding the classification of specific instances within such categories. For flaring in the oil sector, the World Bank's Global Gas Flaring Reduction Partnership (GGFRP) has devised a set of definitions in close consultation with stakeholders, which provides a widely held understanding specifically for flaring at oil production facilities considering the categories of routine flaring, safety flaring, and non-routine flaring . The GGFRP definitions address only the upstream however. Fossil gas production does not typically incur flaring as operations are focused on capturing and bringing the gas to market. For venting, there are no comparable definitions. Flaring can also provide an alternative to venting where no other options for the disposal of excess gases are available. Flaring is generally the safer approach for disposal relative to venting. However it remains a second-best option compared to full emission mitigation. In the EU gas mid- and downstream , industry argues that there is no reason to vent or flare to balance production and demand . However, some operational activities (including maintenance and start/stop operations) and the use of pneumatic equipment entail emissions. It is unclear from available reports how much of the total methane emissions in this part of the supply chain derive from venting and flaring across the EU . Recent examples by the Clean Air Task Force campaign ‘CutMethane’ of recorded venting activities from infrastructure across Europe signal a larger-scale issue. Further emission reductions are technically achievable by application of best available practices, which, however, remains fragmented. Emission reductions in transmission and distribution, for example, are subject to awareness and to considerations of operators’ costs against environmental benefit, impact of asset (un)availability, and security of supply . Current frameworks do not seem sufficient to appropriately tackle the issue. On basis of a survey conducted on request of the Commission, GIE-MARCOGAZ comes to the conclusion that “the reduction of venting and flaring is neither regulated nor incentivised in most European countries” . As far as national provisions exist, they commonly emphasize licensing requirements from the relevant competent authority to conduct activities releasing methane emissions into the air. b)Venting and flaring in the coal sector For the coal sector, methane emissions are primarily linked to hard coal underground mining activities, both in operating and abandoned mines. Methane is produced during the coal formation and is released into the atmosphere during mining activities though ventilation and degasification systems and from cracks in the coal seams post mining operations. Emissions from lignite mines are more difficult to identify, as according to IPCC Guidelines, it is not yet feasible to collect mine-specific higher tier measurement data for surface mines . In underground mines, methane is an important health and safety issue as it can, in certain concentrations, lead to explosions. Production releases methane trapped in coal seams, called coalmine methane (CMM). Methane can be captured before, during and after mining by pre- and post-mining drainage techniques, respectively. In active underground mines, atmospheric methane concentration is continuously controlled. Methane drainage can be used to lower the percentage of methane in the air by capturing the gas to prevent it from entering mine airways. In the EU, recovered CMM is, if at all, most commonly used for power generation on site . Current practices differ by Member State and mine. Ventilation air from underground mines contains diluted concentrations of methane, referred to as ventilation air methane (VAM). VAM can be mitigated with or without energy recovery , though solutions remain comparably expensive . Today, incentives are often insufficient to ensure recovery of such methane emissions. At present, there are no EU-wide specific regulations limiting CMM or VAM. In some Member States, national legislation is in place to reduce the fugitive methane losses from coal production , . In Germany, while there is no direct requirement for mining companies to capture those gases , coal mine methane and abandoned mine methane are eligible for feed-in-tariffs when used to generate electricity. In its 2014 State Aid Decision on the relevant German Renewable Energy Law (EEG), the Commission finds the measure to be an effective and proportionate incentive , which was reaffirmed in the 2021 decision on the amended EEG . A similar approach is taken in France for coalmine methane for environmental protection and safety purposes, where legislation aims to ensure a tariff that reasonably covers the exploitation costs of this resource while limiting the revenues. Since 1990, certain EU countries have drastically reduced methane emissions from coal mining, such as Germany and the Czech Republic. In comparison, since that time, no changes have been recorded in Romania, while in Poland, methane emissions from coal have been reduced by only around 17% . Some projections consider that the decrease in coal production will lead to a decrease in coal-related methane emissions . However, recent studies have shown that these emissions might be currently underestimated, and that emissions of mines with continued production are likely to increase in the future because of exploitation of deeper and gassier deposits due to the exhaustion of shallow coal reserves . Once production is halted and a mine is abandoned, it continues to release methane, referred to as abandoned mine methane (AMM), over a long period of time . Attribution of responsibility for those emissions and their abatement can pose a problem depending on ownership and exploitation rights, and treatment of AMM remains fragmented with significant quantities escaping into the atmosphere and emissions projected to increase as more mines close . 2.2.3.Lack of information on and mitigation of methane emissions occurring outside the EU but linked to consumption of fossil energy in the EU. EU import dependence is 95.7% for oil and 89.7% for fossil gas . As discussed above, neither precise knowledge nor official estimations exist on the magnitude, origin or nature of methane emissions occurring outside of the EU and specifically linked to fossil energy consumed in the EU. The same market failures occurring within the EU also apply to operators in countries exporting energy to the EU. Lack of information is a particularly strong driver for market failures across borders as internalisation of externalities is further impeded. Exporters lack incentives to act on methane emissions as long as importers do not have access to reliable emission information that could inform their buying decisions (e.g. to fulfil company or demand-driven environmental considerations) or internationally occurring externalities are priced in through (domestic) regulation . Whereas for instance local air pollution would primarily be a domestic concern, global warming effects are externalities that affect exporters, importers as well as third parties. Some exporting countries are beginning to act domestically on methane emissions from the energy sector. For many exporters operating under conditions without domestic regulation of methane emissions the only reliable incentive, however, would be clear market signals. For such signals to emerge, relevant information needs to become available and visible. In the absence of obligations to submit comprehensive GHG inventories to the UNFCCC, uncertainties about emissions related to imported fossil energy are aggravated by many exporting countries yet having to submit any data, making estimates of actual emissions dependent on incomplete top-down observational data (e.g. from satellites) and extrapolation. A number of key exporting countries of fossil energy to the EU are parties to the Paris Agreement, and are as such committed to its greenhouse gas reduction objectives. These include Algeria, Australia, Colombia, Iraq, Nigeria, Norway, Qatar, Russia, Saudi Arabia, South Africa, the United Kingdom, and the United States, which are all major exporters of either coal, fossil gas or oil to the EU. While parties to the Paris agreement are normally expected to submit national GHG inventories data to the UNFCCC, to date, of those major exporters, only five have submitted full inventories: Australia, Norway, Russia, the United Kingdom and the United States. Even for those countries that have submitted national GHG inventories, the quality of the data is only as good as the levels of tier of reporting employed. As stated in the case of the EU, there is no obligation to report direct source-level measurements of emissions (Tier 3 reporting, according to the IPCC guidelines) in the GHG inventories delivered to the UNFCCC. The nine largest exporters of fossil fuels to the EU are considered to be responsible for half of the world's methane emissions . Russia and the United States alone, which are the largest exporters of fossil fuels to the EU, are estimated to be responsible for one-third of methane emissions in the energy sector worldwide . According to the IEA , Russia was estimated to have emitted almost 14 million tonnes of methane in the energy sector for oil and gas in 2020, followed by the United States, which emitted 11.8 million tonnes of methane that same year. Iraq and Algeria were estimated to have emitted respectively 3.4 million tonnes and 2.6 million tonnes of methane. As a point of comparison, the EU’s entire energy sector was estimated to have emitted 3.1 million tonnes of methane in 2019 within the EU. Moreover, according to a series of scientific studies coordinated by environmental organisations, not only have emissions from oil and gas production activities increased globally from 65 to 80 Mt/year in the last 20 years, but such emissions from national inventories have been widely underestimated and industries are likely to be underreporting methane emissions in the energy sector . Case studies for specific production areas or parts of the supply chain in the US, Canada , Russia , and Iraq all show significant underreporting with actual emissions up to 15 times higher. In addition, the number of large methane leaks around the world, each associated with an ultra-emitter, was found to amount to more than 1,800 single observed anomalies over two years (2019-2020), a large fraction of them located over Russia, Turkmenistan, the United States, the Middle East and Algeria . Currently, voluntary industry-led initiatives remain the principal course of action for methane emission mitigation in many countries but are not sufficient for addressing the global oil and natural gas value chain. Existing regulatory instruments often remain either ineffective, incomplete or non-existent among a number of countries exporting fossil energy to the EU. For instance, approaches to regulations on venting and flaring across oil and gas producer countries vary widely. Major exporting countries to the EU such as Russia, Saudi Arabia, Iran, Iraq and United Arab Emirates do not have any regulations restricting venting and flaring; the US has restrictions, performance standards and taxes/fees on venting and flaring but not at federal level, and Russia applies a fee for flared gas but allows deductions for investment in associated gas infrastructure. Among the same set of countries, only the United States have prescriptive regulations on leak detection and repair. For exporters, especially in the absence of effective domestic regulation, clear market signals would be a strong incentive, but remain absent.

2.3.How will the problem evolve? 2.3.1.Contribution of methane emissions to temperature change The Intergovernmental Panel on Climate Change (IPCC) notes that deep reductions in methane emissions must be achieved by 2030 for the world to stay below 1.5°C (and similarly 2°C) temperature change . Figure 3 highlights the projected temperature developments in relation to the mitigation of methane emissions. Recent estimations show that at a global level, reducing methane emissions associated with anthropogenic activity by 45% by 2030 would avoid 0.3°C of global warming by the 2040s. The strong effect of methane on climate change requires accelerated action. Without regulatory intervention, internalisation of the externalities caused by methane emissions is unlikely, and the market failure will persist. With respect to all three identified problem drivers, increasingly ambitious commitments to global climate objectives set a positive frame for action. While voluntary industry initiatives exist, economic incentives for operators, however, often remain insufficient without regulatory action. As discussed in Section 2.2.2., relevant existing EU regulation does not provide sufficient measurement, reporting and verification obligations for accurate information on the full extent of methane emissions in the energy supply chain. It also leaves mitigation of a large part of methane emissions outside of its scope with current provisions focused predominantly on specific sub-sectors in end-use (see Table 2) 2.3.2.Why methane emissions will still be relevant in a decarbonised future Methane emission mitigation is important to lessen fossil energy’s impacts on climate change and the environment while clean fuels progressively replace fossil fuels. The regulatory framework being put in place in the context of the European Green deal is supportive of the progressive replacement of fossil fuels with renewable and decarbonised energy carriers, towards which the Commission’s July 2021 Green Deal proposals contribute, including among others the revision of the Renewable Energy Directive, as well as the Hydrogen and Gas Market Decarbonisation Package. Presently, fossil fuels still dominate the energy mix and fossil gas is often seen as a transition fuel for the coming decade, warranting appropriate emission reductions to enable such a role and ensure sufficient security of supply during the transition. The impact assessment of the 2030 Climate Target Plan discusses the evolution of the energy system in line with the climate neutrality objective by 2050, and provides elements on the possible sources of future methane emissions in a progressively decarbonised energy system. The analysis contained in the impact assessment reveals that while overall consumption of fossil gas is expected to progressively reduce over time, by 2030 it is projected to be only around 13% lower than in 2015, eventually reducing by around 70% in 2050 compared to 2015, which still represents a consumption of around 100 Mtoe. Figure 4: Energy gross inland consumption (Climate Target Plan impact assessment) Fossil gas consumption still increases from current levels by 2030 in some Member States and will remain a major source of heating for buildings until 2030. Especially in urban areas, the health impacts from methane emissions’ contribution to ozone formation will therefore continue to remain an important factor. It is also important to highlight that other forms of methane-based fuels will develop in the EU energy system throughout this transition. While biomethane and low-carbon synthetic methane are expected to play a limited role by 2030, they are expected to be increasingly deployed afterwards. In 2030, their consumption amounts to close to 20 Mtoe and is projected to keep increasing afterwards to reach around 60 Mtoe of biogas and 50 Mtoe of synthetic methane by 2050, for uses in various sectors of the economy. As a consequence, methane-based fuels, which will continue to be transported through the existing gas network, will continue to represent an important element of the EU decarbonised energy system by 2050, amounting in total to 60%-70% of the consumption of gaseous fuels observed in 2015. This consumption is a potential source of methane leaks along the entire supply chain for both fossil and renewable gas, both with the EU as well as outside the EU when these fuels are imported. Also for hydrogen, the issue of methane emissions remains if it is produced from fossil gas. Fugitive and intentional releases of methane remain relevant in the production and transmission of fossil gas to the point of transformation into hydrogen, potentially impeding or eliminating any greenhouse gas emissions advantage of such hydrogen.

Furthermore, while coal is projected to virtually disappear from the EU energy system by 2050, some limited consumption of oil is expected to remain by 2050 notably for non-energy purposes. This refining, transport, distribution and consumption of oil can also be a source of venting and leakage of methane. Finally, and in addition to possible methane emissions from actively operated assets, emissions from closed and abandoned sites (coalmines, oil and gas boreholes and wellheads, etc.) represent a long-term issue independent of future consumption that also needs to be addressed. As a consequence, a fully decarbonised EU energy sector will still be associated with risks of methane emissions along the active supply chains of liquid and gaseous fuels (be it within the EU or externally through the imports of fuels), as well as from closed fossil fuel production sites. Specific actions to abate these emissions is thus required to ensure that such an energy sector fully contributes to the EU climate neutrality objective. 2.3.3.Availability of data The current reporting requirements and recommendations for use of the different tiers under UNFCCC reporting can be improved (see 2.2.1), and substantial improvement of data availability and accuracy for methane emissions is unlikely to be forthcoming under present conditions. However, parts of the oil and gas industry have recognised the issue and the setting up of the Oil and Gas Methane Partnership (OGMP) voluntary initiative on measuring and reporting of methane emissions by companies is based on the premise that by establishing best-practices in both emissions quantification and management, the OGMP equips partner companies with the tools to systematically survey their operations to identify equipment and processes with high potential to emit methane, and to utilize proven methods to minimize these emissions . Indeed, the objectives of OGMP are to improve the availability of global information on where partner companies can reduce methane emissions and driving mitigation actions to achieve methane emission reductions . This approach is in fact considered best practice, on the basis that while measurement and reporting on the one hand, and mitigation on the other, are distinct activities, they are also strongly related because mitigation can be most effective and cost-efficient when based on sound measuring, reporting and verification (MRV) practices . To date, 62 companies have signed up to OGMP, covering 30% of global oil and gas production and assets on five continents . Nevertheless, the OGMP is a voluntary initiative and does not provide full coverage of EU methane emissions or emissions linked to EU fossil fuel consumption. For further development of data availability through the OGMP, it is unfortunately not possible to predict the further uptake by industry or how many companies will sign up to the OGMP going forward. It is also limited to the oil and gas sectors and does not address methane emissions from coal. Once operational, reporting is limited to aggregate numbers on an annual basis, imposing limitations on transparency. While providing a positive impetus, the voluntary nature and incomplete coverage of OGMP make it an unsuitable stand-alone basis for regulatory action on mitigation. Without a solid MRV framework, and in continued absence of verified source-level data as basis for evidence-based measures and reliable metrics for the evaluation of their success, regulatory action on methane emission mitigation remains constrained in its options. As regards methane emissions occurring outside of the EU, unless measures to specifically address them are put in place, it can be expected that the critical situation clearly detailed in Section 2.2.3 will continue in the future. 2.3.4.Mitigation of methane emissions within the EU and outside the EU in relation to fossil fuels consumed in the EU While voluntary initiatives for the mitigation of fugitive and intentional methane emissions from the oil and gas sector exist, their focus often remains limited to specific sub-sectors and instances. For example, the World Bank’s Zero Routine Flaring by 2030 initiative has brought together governments and industry stakeholders to commit to end the practice at the production stage for oil. It does not address other sectors, parts of the supply chain, or non-routine and safety flaring. For venting, no comparable initiative exists. In the coal sector, positive developments across Member States have primarily been driven by regulation and subsidies, not by industry action. As long as non-abated fossil energy is produced and consumed in the EU, emissions relating to their production and transport occurring also outside the EU will continue to be emitted. The import of energy into the EU remains relevant also within the context of achieving the 2050 climate neutrality objective as: i) according to PRIMES modelling, even in 2050 the import of fossil fuels does not decline to zero (see Figure 4 with part of the remaining use as feedstock for other purposes than energy consumption), ii) the decline is gradual and emissions linked to imports in the upcoming decades could threaten the global achievement of the Paris Agreement climate goals if left unabated, and iii) existing import infrastructure is projected to be used for the import of renewable and decarbonised gases. For methane-based gases, e.g. in the case of biomethane, the same problem and problem drivers as for methane emissions from fossil gas are relevant. In the case of other renewable or decarbonised gases, e.g hydrogen , relevant concerns remain according to their environmental and climate impact in the case of leaks or intentional release.



Figure 5: Net imports of fossil fuels (Source: PRIMES) Without EU action, the external costs of methane emissions would risk not being sufficiently addressed and no new incentives would be set for international market players to address methane emissions. Voluntary industry-led initiatives remain the principal action in addressing methane emissions across the oil and natural gas value chain outside of the EU. Lack of information and adequate mitigating measures persist, and existing regulatory instruments remain either ineffective, incomplete or non-existent among a number of countries exporting fossil energy to the EU.

In conclusion, under a scenario of continuation of the current situation and on-going initiatives, the availability and quality of information would improve only to a limited extent and more importantly, the overall problems and underlying problem drivers will remain. 3.Why should the EU act? 3.1.Legal basis The legal basis of this initiative is Article 194 of the Treaty on the Functioning of the European Union, which empowers the EU to establish the measures necessary to achieve the objectives of the Union with regard to policy on energy, in the context of the internal market and with regard for the need to preserve and improve the environment. Methane is a greenhouse gas and an ozone-precursor that knows no borders. When emitted in one country, it will have a climate and air quality impact in others. The proposal aims to create a new policy framework facilitating the reduction of methane emissions, which is key to achieving the EU’s climate objectives and the zero pollution ambition, building on and complementing existing EU law already partially regulating methane emissions from the energy system. 3.2.Subsidiarity: Necessity of EU action Methane emissions in the energy sector are a transboundary problem and vary across national and regional levels of the EU. They are relevant in all Member States but to a varying degree, depending on their energy mix and natural endowments, e.g. how many underground coalmines are operated or sealed, how much fossil gas is produced or transported. The scale of EU gas infrastructure demonstrates the Union wide aspect, with roughly 190,000 km of transmission pipelines across all Member States . As highlighted above, the level of reporting of emissions differs by Member State and sector, with some Member States opting for the least effort approach, limiting the development of an accurate measurement basis for further action. While some Member States have already addressed methane emissions mitigation in specific sub-sectors, others do not have provisions in place or only private sector initiatives are addressing the issue. Private initiatives are however insufficient as main instruments to address methane emissions due to limitations in scope, participation, and incentivisation in case of non-adherence. Diverse national approaches may lead to inconsistencies in regulatory treatment across Member States, increasing the administrative burden on companies operating in more than one Member State, potentially impeding the functioning of the internal market through the creation of barriers to operators, as well as complicating the collection of comparable data across the EU. While methane emissions are included under the Effort Sharing Regulation, they are one of a number of greenhouse gases, including CO2, nitrous oxide and F-gases for which a collective reduction target is defined. The persistence of methane emissions in the energy sector within the EU over the last decade, along with the absence of concrete measures in a substantial number of Member States, even if cost efficient, demonstrates that specific EU action can contribute to further and more rapid reductions. Conversely, such EU action to curb methane emissions in the energy sector will help Member States to achieve their Effort Sharing targets. As the majority of methane emissions linked to fossil energy consumed within the EU occur outside the EU, joint action by Member States would be more likely to deliver results for those parts of the supply chain outside of EU borders and preserve the integrity of the internal energy market. The challenges in reducing methane emissions hence require a harmonised and coordinated approach and cannot be addressed efficiently by individual Member States. EU action is thus justified on grounds of subsidiarity in line with Article 194 of the Treaty on the Functioning of the European Union. 3.3.Subsidiarity: Added value of EU action The reduction of methane emissions across the European Union would benefit from a homogeneous policy approach at the EU level given the strong interlinkage between Member States through cross-border infrastructure – in this context particularly gas infrastructure – and the integrated EU energy market. The impacts of measures aimed at methane measurement and mitigation and related effects on innovation, cost-effectiveness, and a level-playing field in maintenance of a well-functioning internal market warrant coordination across Member State borders. Coordinated EU policies have a much higher chance of leading to further reductions in methane emissions in the energy sector. Coordinated action at the EU level furthermore facilitates the full consideration of the different capabilities to act among Member States and private entities. It also affords operators the benefits of a single regulatory regime, facilitating adherence and reducing administrative burden relative to the application of fragmented rules across Member States. The EU and its Member States are part of a global oil market in which collective action carries more weight vis-à-vis exporters than individual national measures. The EU is also the biggest gas import market in the world and can thus influence global methane emissions through its purchasing power, provided a harmonised approach towards such imports. The EU gas market allows for flexible and short-term (spot) trading of gas. While long-term contracts with specific suppliers still exist, the ‘hydrogen and gas market decarbonisation package’, which is part of the Fit-for-55 package, addresses such contracts and seeks to limit their duration to avoid locking-in fossil gas use and to send a signal to decarbonise the gas sector in line with the European Green Deal. Hence, an increasing part of imports may become subject to methane emission considerations in purchasing decisions. EU-level methane policy adds significant value for international climate action. By working to develop a legislation to minimize methane emissions in the energy sector, the EU is sending a strong political signal to external actors, increasing the awareness of the harmful effects of methane emissions on the climate. This signal will not only encourage EU partners to address the problem of methane emissions in the energy sector, but also lead to the creation of an international partnership and thus give the EU a leadership role in addressing methane emissions. The initiative is fully in line with Article 37 of the Charter of Fundamental Rights of the European Union, which requires that a high level of environmental protection and the improvement of the quality of the environment must be integrated into the policies of the Union and ensured in accordance with the principle of sustainable development.

4.Objectives: What is to be achieved? 4.1.General objectives The general objective of the initiative is, in the context of the functioning of the internal market for energy and while ensuring security of supply in the Union, to preserve and improve the environment by reducing methane emissions from fossil energy produced or consumed in the EU. This objective contributes to the ‘Fit for 55’ package , specifically to the greenhouse gas emissions reduction targets of at least 55% by 2030 compared to 1990 as set out by the European Climate Law Regulation and to the EU’s objective of achieving climate neutrality by 2050. 4.2.Specific objectives To achieve the general objective, three specific objectives are addressed by this initiative: I.Improve the accuracy of information on the main sources of methane emissions associated with energy produced and consumed within the EU. The goal is to ensure the availability of source-level data and robust quantification of emissions, and thereby increase the reliability of reporting – including the reporting of GHG inventories data to the UNFCCC – as well as the scope for appropriate measures for mitigation. This specific objective creates the basis for future improvements on specific objective ii). II.Ensure further effective mitigation of methane emissions across the energy supply chain in the EU. This specific objective addresses the market failure leading to insufficient mitigation of methane emissions by companies. III.Reduce methane emissions related to fossil energy imported to the EU. As the majority of methane emissions linked to fossil energy consumed within the EU occur outside the EU, this specific objective seeks to tackle methane emissions in cooperation with partner countries and international organisations, taking into account the security of supply aspects of the EU’s high import dependency for fossil fuels, a large share of methane emissions linked specifically to EU consumption occurring outside EU borders, and the market failures rooted in the absence of information on emissions for importers and of market signals for exporters. 5.What are the available policy options? 5.1.What is the baseline from which options are assessed? In the baseline, only current EU legislation addressing methane emissions linked to the energy sector remain in force (see Section 2.2.2 and Table 2), thereby leaving a large part of those emissions outside the scope of EU regulation. As regards measurement, reporting and verification of methane emissions within the EU, existing legislation does not provide sufficient obligations for accurate information on the full extent of methane emissions in the energy supply chain. The reporting of methane emissions is part of the greenhouse gas emission reporting under the EU Climate Monitoring Mechanism, followed by integrated reporting system of the Governance Regulation , and the European Pollutant Release and Transfer Register (E-PRTR). Reporting continues to be based on the methodologies of the UNFCCC Reporting Guidelines (see Section 2.2.1 and Box 2), including the use of default emission factors and the lack of source-level measurement. As outlined above, this reporting likely underestimates methane emissions along the fossil energy supply chain, as the data cannot be considered complete or sufficiently reliable and there are no specific higher tier reporting obligations at the EU level. As also discussed in more detail in Section 2.3.2, Voluntary industry initiatives to improve reporting and commit to mitigation of methane emissions are a positive step, but by their voluntary nature are unlikely to become exhaustive sources of transparency and abatement for all emissions in the fossil energy supply chain. Overall, in the baseline, information on methane emissions from the energy sector remains inaccurate in national reporting, as well as incomplete in industry reporting. Such lack of (accurate) information creates barriers for adequate mitigation of emissions, with implied economic and social costs if their unabated contribution to global warming continues. Current EU regulations, as would continue to apply in the baseline, exclude concrete mitigation of methane emissions among substantial, methane-emitting, parts of the energy supply chain and national regulations remain isolated and limited to specific (sub-) sectors, leading to continued unabated emissions, additional barriers for private sector providers of mitigation solutions, as well as long-term adverse health outcomes for citizens. As described in Sections 2.2.3 and 2.3.3, for methane emissions occurring outside of the EU but specifically linked to fossil energy consumed in the EU, at best partial and likely incomparable information would be available in the baseline as regards imports depending on domestic measures taken by exporting countries and their submission of greenhouse gas inventories to the UNFCCC. In partnership with the United Nations Environmental Programme (UNEP), the Climate and Clean Air Coalition (CCAC) and the International Energy Agency, the Commission is supporting the establishment of an independent international methane emissions observatory anchored in a United Nations framework, tasked with collecting, reconciling, verifying and publishing anthropogenic methane emissions data at a global level. Support for setting up the IMEO was subsequently provided by the Council in its January 2021 conclusions on Climate and Energy Diplomacy . While the IMEO is in the process of being set up, it has yet to be formally endorsed by energy partner countries to the EU, its financing has not been fully secured and the exact scope of its operations need to be defined and agreed. The supporting function of the International Methane Emissions Observatory depends on further commitments and contributions from partners outside the EU, and implementation of appropriate measures such as the Methane Supply Index. As regards the costs of the IMEO, it has benefitted from 10 Million Euros committed from the EU budget. Further funding is still being sought from voluntary donations from governments and independent organisations willing to support such a project.

While the continued implementation of the Paris Agreement may lead to some improvements in reporting and mitigation of emissions, the current level of methane emissions and scientific projections do not suggest sufficient progress. While additional public awareness may result from improved data becoming available from satellite detection technology, for many exporting countries incentives may remain insufficient to (further) reduce methane emission levels linked to fossil energy destined for consumption within the EU. 5.2.Description of the policy options The policy options are structured along the following three policy areas building on the problem drivers and the intervention logic diagram: ·Policy area 1: Improving measuring and reporting of methane emissions in the EU ·Policy area 2: Mitigation of methane emissions in the EU ·Policy area 3: Measuring, reporting and mitigation of methane emissions linked to EU fossil fuel consumption but occurring outside the EU 5.2.1.Targeted entities One element which is common to all of the options assessed below across all three policy areas is that the targeted entities are companies in the energy sector. These include all companies involved at some point in the energy value chain in the relevant energy sub-sectors (depending on the option, this includes either oil and gas or coal or sectors explicitly mentioned as being included under the term ‘indirect emissions’) which are responsible for an activity which is known to or has the potential to leak, vent or flare methane. Where an option includes an obligation, this means that the obligation would fall on such a company. When ownership of the asset in question cannot be attributed to any one company, for instance in the case of an abandoned mine or well, the obligation would fall on the country in whose jurisdiction the asset is located. 5.2.2.Policy area 1: Improving measuring and reporting of methane emissions in the EU This policy area considers measures to improve measuring and reporting of methane emissions in the energy sector. In the context of greenhouse gas emission measuring and reporting, the term ‘MRV’ is used. MRV typically covers three categories of activities: i) monitoring, which encompasses direct measurements and other methods for quantifying emissions; ii) reporting, which covers compilation of estimated emissions in specific formats for internal use or external circulation; and iii) verification of emissions and/or emission reductions, often by a third party, for internal purposes or as required by public regulations . Option 1.0: Business as usual scenario In the baseline, no additional policies are developed. Refer to sections 2.2.2 and 5.1 for a description of how measuring and reporting of methane emissions is currently being regulated in the EU through the EU Climate Monitoring Mechanism and the integrated reporting of the Governance Regulation, the E-PRTR and for a description of the OGMP voluntary initiative by the oil and gas industry. Option 1.1: Mandatory measuring and reporting of oil and fossil gas companies. Obligation on oil and fossil gas companies to carry-out direct source-level measurements and reporting of direct emissions of methane by making relevant parts of the OGMP standard legally binding to economic activities in the EU territory. The OGMP 2.0 framework has five levels of reporting. Source-level reporting begins at level 3, which is considered comparable with UNFCCC tier 3. It allows generic emission factors to be used. OGMP 2.0 level 4 reporting requires direct measurements of source-level methane emissions. It allows the use of specific emission factors. OGMP 2.0 level 5 reporting requires the addition of complementary site-level measurements. In addition, the OGMP 2.0 framework requires companies to report direct measurements of methane emissions within three years of joining OGMP 2.0 for operated assets and within five years for non-operated assets. Building on the approach taken in OGMP 2.0 with regard to source-level reporting and taking into account that a large number of Union companies had already signed up to OGMP 2.0 in 2021, Union operators would be required to deliver direct source-level measurements of their emissions within 24 months for operated assets and within 36 months for non-operating assets. A site-level measurement is a top-down measurement (as opposed to source-level measurement, considered a bottom-up measurement), and typically involves the use of sensors mounted on a mobile platform (such as on vehicles, drones, aircrafts or boats), satellites, or other means to capture a complete overview of emissions across an entire site. This quantification of site-wide emissions, which is independent from source level quantification, allows assessment and verification and reconciliation of source-level estimates aggregated by site, thereby providing improved confidence in reported emissions.

The approach taken in OGMP 2.0, of requiring site-level measurements to reconcile source-level measurements, is the approach taken here as well. Option 1.2: Mandatory measuring and reporting of oil, fossil gas and coal companies. As per 1.1 but widening the scope to include coal methane emissions. OGMP does not cover coal emissions. Option 1.3: Mandatory measuring and reporting of direct and indirect emissions. As option 1.2 but widening the scope further to include indirect emissions, which occur from final end use/consumption of oil, fossil gas or coal. Such emissions are not covered by the OGMP. Some oil and gas companies are already voluntarily reporting such indirect emissions, and IPIECA (the global oil and gas industry association for advancing environmental and social performance) recommends that oil and gas companies undertake reporting on the basis of an existing international standard – the GHG Protocol scope 3 (scope 3 refers to indirect emissions) reporting standard . This option proposes to set binding rules on companies to report their indirect emissions based on that standard. 5.2.3.Policy area 2 - Mitigation of methane emissions in the EU Options 2.1 to 2.3 below contain best practice methane abatement measures covering key aspects of the main prescriptive measures typically used to mitigate methane emissions in the oil and fossil gas sectors, which includes methane leakage detection and repair, and limits on venting and flaring. Option 2.0: BAU scenario In the baseline, no additional policies are developed. Refer to sections 2.2.2 and 5.1 for a description of how methane emission abatement is currently being regulated in the EU though the ESR, the IED, Ecodesign and Energy labelling regulations and individual Member States regulations. Option 2.1: Commission guidance on mitigation of methane emissions in the oil and fossil gas sectors. As explained previously, several voluntary initiatives to abate methane emissions exist in the oil and gas sectors (see section 2.2.2 for a detailed list of oil and fossil gas sector initiatives). These are based on best practice methane abatement measures covering key aspects of the main prescriptive measures typically used to mitigate methane emissions in the oil and fossil gas sectors, which includes methane leakage detection and repair (LDAR) surveys and limits on venting and flaring. In contrast to the oil and gas sectors, there are no industry-wide voluntary schemes to abate methane emissions in the coal sector on which Commission guidance could be based. This option therefore only covers the oil and gas sectors. This option includes Commission guidance based on a combination of best practices contained in such voluntary initiatives as well as from existing methane regulations considered state of the art, together with detailed technical input received from various stakeholders in response to the Public Consultation for this initiative. Key aspects of such guidelines would be as follows: Periodic Leak Detection and Repair Surveys: Methane emissions from leaks are most commonly reduced LDAR surveys, carried out to identify leaks and followed by repair of such leaks. Operators should therefore conduct periodic LDAR surveys and these should also cover surveying of components that vent methane, to survey for unintentional venting of methane. Guidance would include minimum requirements for LDAR surveys, while leaving an adequate degree of flexibility to Member States and operators. New technologies and detection methods continue to emerge and Member States should encourage innovation in this sector, so that the most accurate and cost-effective methods can be adopted. LDAR surveys should reflect a number of good practices. LDAR surveys should be primarily aimed at finding and fixing leaks, rather than quantifying them, and those areas with a higher risk of leaks should be checked more frequently; the frequency of surveys should be guided not only by the need to repair components from which methane is escaping above the methane emission threshold but also by operational considerations, taking into account risks to safety. Thus, where a higher risk to safety or higher risk of methane losses is identified, the competent authorities should be allowed to recommend a higher frequency of surveys for the relevant components; all leaks irrespective of size should be recorded and monitored, as small leaks can develop into larger ones; leak repairs should be followed by confirmation that they have been effective; in order to allow for future, more advanced methane emissions detecting technologies to be used, the size of methane loss at or above which a repair is warranted should be specified, while allowing operators the choice of detection device. Limiting venting and flaring Best practice regulatory approaches to limit venting consist of prohibiting it except in the case of emergencies, malfunction or during certain specific events where some venting is unavoidable. With regards to flaring, when carried out during the normal production of oil or fossil gas and as a result of insufficient facilities or amenable geology to re-inject methane, utilise it on-site, or dispatch it to a market, it is considered routine flaring. In this option, flaring would be recommended when it is the only alternative to venting and where venting is not prohibited. Re-injection, utilisation on-site or dispatch of the methane to a market should always be preferable to flaring - and therefore venting - of methane. Exceptions where venting could be allowed (such as emergencies, malfunction or during certain events where some venting is unavoidable) are necessary to ensure that measures prohibiting venting do not contribute to increases in risk to safety. Thus measures must allow venting to occur in the case of temporary, unexpected, infrequent situations in which methane emissions are unavoidable and necessary to prevent an immediate and substantial adverse impact on human safety, public health or the environment. Also venting should be allowed in the case of malfunctions, that is to say in the case of a sudden, unavoidable failure or breakdown of equipment beyond the reasonable control of the operator that substantially disrupts operations.

Option 2.2: Mandatory measures on mitigation of methane emissions in the oil and fossil gas sectors. As per option 2.1 but instead of issuing guidance, all of the measures listed above would be mandatory. Option 2.3: Mandatory measures on mitigation of methane emissions in the oil, fossil gas and coal sectors as well as indirect emissions. As per option 2.2 but with an increased scope of emissions, covering a) coal from both operating and non-operating mines, and b) indirect emissions from the oil, fossil gas and coal value chains. Although unlike the oil and gas sectors, there are no industry-wide voluntary schemes to abate methane emissions in the coal sector on which to base either Commission guidance or mandatory measures, this option assesses the merits of including coal in its scope of mandatory measures. On top of the oil and gas measures included in option 2.2, this option therefore includes specific coal sector methane abatement measures. These measures include the requirement to capture methane and to use it on-site or dispatch it to market rather than vent it. It however makes an exception in the case of very low concentrations of methane emanating from ventilation shafts, allowing methane in such instances to be oxidated. As regards non-operating mines, it requires sealing of mines to prevent methane from escaping. Option 2.4: Legislative measure to achieve a certain reduction in methane emissions. Instead of specific measures prescribing how to reduce methane emissions in the energy sector (as per options 2.2 and 2.3), another approach to mitigate methane emissions is via outcome-based requirements which require obligated entities to meet a specific emissions target or standard, but without specifying how to meet it. 5.2.4.Policy area 3 – Measuring, reporting and mitigation of methane emissions linked to EU fossil fuel consumption but occurring outside the EU While under policy areas 1 and 2 only methane emissions linked to the energy sector and occurring within the EU are considered, policy area 3 sets out various policy options which could be used to include all methane emissions linked to the consumption of fossil fuels in the EU. These options therefore envisage measures on non-EU actors exporting fossil energy to the EU market. Option 3.0: BAU scenario The situation in the baseline in this policy area is described in detail in sections 2.2.3 and 5.1. which highlights the low level of accuracy, as well as high levels of methane emissions from countries that are key exporters of fossil energy to the EU. Option 3.1: Mandatory measuring, reporting and mitigation of fossil energy sector emissions. Mirrors options 1.2 and 2.3 from policy areas 1 and 2, but applying them also to all methane emitting fossil energy consumed in the EU, including imported energy. It therefore consists of an obligation on coal, oil and fossil gas companies to carry-out source-level measurements and reporting of direct emissions of methane as well as obligations covering key aspects of the main prescriptive measures typically used to mitigate methane emissions in the coal, oil and fossil gas sectors, which includes obligations on methane leakage detection and repair and limits on venting and flaring. Option 3.2: Transparency measure on MRV and mitigation of methane emissions of fossil fuels consumed in the EU. With the aim of achieving the same results as 3.1 but based on influencing sourcing decisions through greater transparency on emissions and including the development of an EU initiative to develop a global super emitter monitoring tool as an incentive for compliance. It is composed of two complementary parts: 1.Creation of a transparency database for fossil energy imports into the EU, containing the following, cumulative, requirements: ·Information provided by operators as regards efforts to measure and report as well as reduce their methane emissions. Indication of regulatory equivalence with EU legislation, including secondary legislation, on measurement, reporting and mitigation of methane emissions (via leakage detection and repair programmes and limits to venting and flaring) in the country of origin supplying the oil/fossil gas/coal to the EU. ·Until regulatory equivalence is ensured, indication that the fossil energy is being purchased from a company that has signed up to the OGMP for oil and/or fossil gas companies, and for coal, at a later date, according to agreement on MRV methodology developed under tertiary EU legislation 2.Setting-up of methane emitter global methane monitoring tool Creation of global methane monitoring tool based on inputs from Copernicus as well as other satellites and services which will regularly publish the results of aerial monitoring of high methane emitters from around the world and which will provide continuous updates on the magnitude, recurrence of high methane-emitting sources and their exact location. Option 3.3: Legislative measure to achieve a certain reduction in methane emissions. Mirrors option 2.4 but applying it also to oil, fossil gas and coal imported to the EU; it would therefore impose outcome-based requirements which require obligated entities to meet a specific emissions target or standard, but without specifying how to meet it.

6.What are the impacts of the policy options? The analysis of the impacts of the options is carried out in two principle ways: Environmental and social impacts As methane emissions have a direct impact on climate change, any mitigation of methane emissions has a direct positive environmental impact both in terms of climate change, as well as in terms of air pollution (as methane is a precursor to ozone). Methane is also an air pollutant, therefore the social impacts are interpreted as the indirect impacts on human health. Less methane emissions lead to reduced air pollution and less health issues and to slower climate change. Based on these considerations, the environmental and social impacts are closely related and are assessed together. Under policy areas 2 and 3, for which quantitative estimations are available, ‘environmental and social impacts’ include the amount of methane emission reductions that result from the measures associated to the level of abatement costs (at ‘negative or zero’ costs, at equal or less than ‘low costs’ or at less than the sum of ‘social and environmental costs of methane’ – see section 6.2.1 for full definitions and further explanation) that will result, or are most likely to result, from choosing that option. Estimations of the various environmental and social benefits associated with those amount of methane emission reductions are also provided. Economic impacts and administrative burden For policy area 1, the assessment of the economic impacts and the administrative burden is based essentially on information received from representatives from the sectors included in the scope assessed in the options. However, the information obtained was only partial and mostly qualitative. Under policy areas 2 and 3, for which quantitative estimations are available, the sections on ‘economic costs and administrative burden’ assess which shares of reductions are achievable at different levels of cost-effectiveness (cost-effective to the company vs. cost-effective to society – factoring in the external benefits) and identifies the associated list of measures through which those reductions can be achieved. In the case of both GAINS projections (policy area 2) and IEA estimations (policy area 3), abatement cost estimations for each individual measures are in terms of net costs. These abatement costs consider the cost-savings of utilising recovered gas after deducting revenues from investment and operational costs. This includes the sum of fixed investment costs, labour costs, non-labour related operation and maintenance costs, and energy-related cost savings (methane sold on the market as natural gas). 6.1.Policy area 1: Improving measuring and reporting of methane emissions in the EU 6.1.1.General considerations for policy area 1 Environmental and social impacts More precise data and accurate measurements, monitoring, reporting and verification (MRV) of methane emissions, do not per se have a direct effect on the amount of emissions, however they provide the data necessary to accurately determine the causes and magnitude of methane emissions and to monitor the impact of the mitigation actions and the basis for possible additional future policy action if deemed necessary. Achieving robust MRV is therefore an essential part of the emission abatement process, and consequently its benefits as well as costs should be considered also in terms of the more effective abatement of methane emissions that it contributes towards, including the associated environmental and social benefits of that abatement. Economic impacts The main distinguishing feature under policy area 1 are the economic impacts on operators, which is analysed below in more detail. As observed above for environmental impacts, the costs of achieving robust MRV should be considered also in terms of the more effective abatement of methane emissions that it contributes towards. This is especially important to recognis