Navigating the Impact & Outcomes of the EU Regulations with IOGP Europe

The International Association of Oil & Gas Producers (IOGP) is the global voice of the oil and gas industry, leading in safe, efficient, and sustainable energy supply to enable a low-carbon future. IOGP Europe's members include integrated energy companies, national oil companies, independent upstream operators, service companies, and industry associations that operate globally, supplying over 40% of the world’s oil and gas demand. For nearly 50 years, they have served as a unique forum, sharing expertise and best practices in safety, health, environment, engineering, and now, industry and energy transitions.

Emils Lagzdins, Senior Policy Officer at IOGP Europe, joins us for an exclusive interview ahead of his presentation on, Navigating the Regulatory Landscape, at the Methane Mitigation Europe Summit, taking place in Amsterdam, from 12-14 February. Emils has spent three years with IOGP Europe in Brussels, engaging with the upstream oil and gas industry, EU institutions, and other stakeholders on issues such as the EU Methane Regulation, carbon markets, and security of supply. Before joining IOGP Europe, Emils worked on international energy policies in DG ENER of the European Commission.

Read as he shares his insights on the new methane reduction regulation in the EU, its impact on the oil and gas industry, and the outcomes of COP28! 

Maryam Irfan, Industrial Decarbonization Network: To start, can you tell us a little about what your role as Senior Policy Officer at IOGP Europe entails?

Emils Lagzdins: For those unfamiliar with IOGP or IOGP Europe, we are a trade association based out of Brussels, advancing the views and position of the upstream oil and gas industry across Europe. We maintain close contact with key policymakers in Brussels, including the Council, the European Parliament, and the European Commission. 
Within IOGP Europe, my area of concentration revolves around energy and climate policies.

My daily responsibilities involve engaging with member companies and their experts on critical issues, such as carbon markets, security of supply, and of course, methane.

LISTEN: Episode 6: Reflecting on COP28 Methane Mitigation Outcomes with OGMP 2.0

Over the past three years, we've followed the EU methane regulation throughout the entire legislative process. It's interesting to see how methane evolved from just a consideration in climate discussions a few years ago, to now occupying a prominent position on the agenda.

Maryam Irfan, Industrial Decarbonization Network: What are your thoughts on what the new EU regulation will mean in practise, especially with regards to reporting obligations, emission targets and implementation timelines?

Emils Lagzdins: The methane regulation serves several objectives, and one of them is to establish accurate and transparent methane emission data across the entire value chain. This regulation targets emissions related to natural gas, crude oil, and coal.

On the flip side, there is clear focus on methane mitigation and necessary actions across the supply chain, and that is something the industry has supported from the get-go.

Recently, there has been political pressure to conclude the methane regulation by COP 28. However, there are still some critical issues that remain to be addressed and we fear that the premature conclusion of this regulation can lead to measures that are not implementable, efficient, or proportionate.

Perhaps I can provide two examples. Firstly, for the annual reporting obligation of subsea wells, there is no viable quantification technology for systemic assessment in a subsea environment. Hence, the inclusion of such a requirement in the regulation raises doubts.

Secondly, while the idea of establishing a binding methane intensity performance standard garners our support in principle, there are a multitude of different complex issues that need to be sorted beforehand. This includes establishing not only an EU-wide but also a globally consistent and verifiable Monitoring, Reporting, and Verification (MRV) framework. Additionally, you have to allow for several reporting cycles in order to establish baselines, especially concerning emission targets.

Furthermore, the intricacy of the value chain presents both physical and legal challenges. For instance, commodities like LNG often become commingled at different stages before reaching Europe, posing a challenge in terms of accurate tracking. Different contractual obligations also complicate matters, making it difficult to implement uniform regulations.

In comparison with existing regulatory frameworks such as C band, exporting/importing oil and gas versus goods like apparel, unlike easily traceable products, oil and gas is very different from exporting something like a shirt, which can be easily traced to where it’s produced. There’s a necessity to have detailed assessment, encompassing the impact on security of supply, the environment and the industry’s competitiveness on both regional and global scales. So, the methodology for setting such performance standards demand thorough consideration, including the parameters defining the values, before their establishment.

READ: Sustainable Investments and the Role of ‘Financial Institutions' in Climate Action

Maryam Irfan, Industrial Decarbonization Network: What do you think are the main motivations behind these specifications?

Emils Lagzdins: From a technical perspective there is a risk of permanently plugged and abandoned wells to be included in the regulation. This is an issue that’s been extrapolated from the US, but it isn't as significant an issue in Europe. This is because we have a licensing regime where operators, upon handing over a license to Member State authorities, are required to properly plug and abandon wells, employing multiple seals (usually three) to prevent leakage. So, there is a lot of extrapolation from what’s happening in other regions with regards to methane intensity standard.

We know the European Parliament has been a huge advocate of addressing methane emissions originating outside of Europe. The majority of methane emissions associated with energy consumption in Europe actually occur beyond its borders. It makes sense, then, that actions are taken to address this issue. The proposals aim to extend, at the very least, the monitoring, reporting, and verification aspects of the regulation to the rest of the world. There's effort to ensure equivalence between European and non-European standards. Numerous countries, including the US and Canada, are revisiting their regulations, indicating a race towards setting exemplary methane emission standards, particularly in the lead up to COP 28.

Maryam Irfan, Industrial Decarbonization Network: Do you think there is a need for more outcome-based regulation which focuses on results versus how we get there?

Emils Lagzdins: I think there’s two sides to this. First you have the command-and-control regulations and then you have the performance-based regulations. Command-and-control regulations offer clarity and predictability, outlining specific compliance requirements for operators. However, they can limit innovation and technological advancements by restricting more cost-effective approaches. 

On the other hand, performance-based regulations allow flexibility and innovation, focusing on desired outcomes rather than specific methodologies. They offer various solutions suited to specific circumstances, which is critical considering the diversity across the natural gas, crude oil, and coal segments, as well as upstream, midstream, and downstream operations. 

Even within the upstream segment, there are differences between offshore and onshore, so there is a definite need for tailored approaches in different types of operations. Evolving regulations in the US and Canada are indicating a move towards a blended approach, acknowledging the trade-offs between command-and-control and performance-based methods. For instance, these revised regulations will offer alternative leak detection and repair technologies to be used by operators, prioritizing outcome efficiency over the method of detection. The ultimate priority should revolve around detecting and rectifying leaks, emphasizing the potential for abatement to determine the technology used. At the end of the day, we need to make sure that the finalized regulation deliver on its primary objective to reduce methane emissions. 

Maryam Irfan, Industrial Decarbonization Network: What is the potential impact of these standards on the oil and gas industry in the EU and what can operators do to start preparing?

Emils Lagzdins: If we focus on MRV (Monitoring, Reporting, and Verification) and Leak Detection and Repair (LDAR), we know that MRV increases granularity in data, which is a positive step towards direct measurements. What the EU is proposing aligns, in some cases, with the OGMP 2.0 framework. In the last year or two, approximately 115 companies have subscribed to OGMP 2.0, in preparing for EU methane regulations, considering MRV compliance is likely to be based on this voluntary framework.

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So, in a way, these operators are ahead of others in terms of the foundational setup of LDAR. However, the repair thresholds, which ranges from one gram per hour to 17 grams per hour poses certain risks. The emphasis on repairing leaks as small as one gram per hour diverts attention from addressing more significant emissions. Field exercises and studies highlight that a majority of methane emissions stem from a few major leaks. Thus, prioritizing larger leaks is crucial, followed by addressing smaller ones.

To provide context, a repair threshold of one gram per hour accounts for 1/14th of methane emissions from a dairy cow in Europe. Small repair thresholds necessitate detection limits as low as 0.15 grams per hour, limiting scope for advanced technologies with lower sensitivities. These advanced technologies can quickly identify bigger emissions within minutes or hours, compared to the three-month delay with conventional methods.

In terms of what operators can do to prepare for the EU regulation is to engage in transparent public reporting and disclosure, fostering trust with stakeholders, investors, and the public. Collaborating with industry associations and participating in initiatives like OGMP, OGCI, and others focused on reducing methane emissions is also advantageous.

IOGP, headquartered in London, has released a comprehensive guidance document assessing over 70 different quantification and detection technologies. This resource is particularly beneficial for smaller operators initiating their methane mitigation strategies.  

Maryam Irfan, Industrial Decarbonization Network: So, everybody’s been talking about COP 28, what are your predictions regarding the outcomes and how they might further impact the regulatory landscape for the oil and gas industry in Europe?

Emils Lagzdins: At COP 28, methane will once again take centre stage for decision makers. Last year marked the establishment of the global methane pledge, targeting not just the oil and gas or energy sectors but also agriculture and waste, setting a 30% reduction target. 

Two years prior, the International Methane Emission Observatory (IMMEO) was established, an initiative our industry has supported from the outset, including the UN, European Commission, and EU at large.

In Europe, the energy sector contributes 11% to total anthropogenic methane emissions, waste and agriculture make up 24% and 56%, respectively. So, action is needed across all sectors. Which is why I think that the spotlight won't just be on energy, but other sectors as well. In terms of oil and gas specifically, attention will likely extend beyond Europe to countries just now considering methane emission reductions, such as those in Central Asia, the Middle East, or Africa. Countries under COP 28 will likely aim to address this.

One example of a potential action could be identifying super emitters across the world, which can easily be detected through satellite technologies. European companies have been at the forefront of methane emission mitigation and are expected to intensify their efforts. Collaboration between these companies and state-owned entities, especially those adjacent to the European Union, has already begun.

Regarding the regulatory landscape, adoption of the regulation is imminent. It's not until 2026 that revisions might be considered in some parts of the regulation. This timeline allows for an assessment of lessons learned, evaluating successes and shortcomings in the current regulation, leading to corresponding changes that must be made.

While several technical aspects remain unresolved, there's hope for their resolution before adoption. Any unresolved issues could pose risks to implementation, necessitating clarification between Member States, their competent authorities, and the European Commission overseeing the new regulatory framework in Europe.

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I think we need to admit that such regulations are seldom perfect from day one, and there is always room for improvement. Swift action on these improvements is essential for companies, for upstream and downstream companies, to address methane emissions efficiently and proportionately.

Maryam Irfan, Industrial Decarbonization Network: What strategies or resources can the industry use to stay informed about the latest updates in EU regulation?

Emils Lagzdins: In Europe, particularly outside Brussels, the city can seem quite foreign to many. Navigating Brussels' political landscape, especially when delving into intricate technical details, can be quite challenging.

Joining an industry association, such as IOGP Europe, can be a significant entry point because we keep our members updated on the latest regulatory developments. Moreover, there is an opportunity for our experts to provide invaluable technical input and offer insights into what works and what doesn't in practical applications. This aspect is crucial not only for organizations like ours but also for our member companies.

It's essential to inform the early stages of the legislative process through well informed democracy based on facts and what is implementable in practice. 

Maryam Irfan, Industrial Decarbonization Network: I understand you'll be joining us at the Methane Mitigation Summit in Europe next year. What are you most looking forward to at this event?

Emils Lagzdins: This will be my second time attending the conference, and I'm excited to host one of the discussion sessions this time, focusing on navigating the regulatory landscape. Engaging in such discussions with other attendees is something I'm eagerly looking forward to.

For someone who doesn’t have a technical background, I've learned a great deal about methane emissions and mitigation strategies over the past three years at IOGP. Although I've gained a fair amount of insight, I still find it immensely interesting to learn about the latest advancements in technology development. Specifically, I'm intrigued by the progress in site-level methane emission detection, encompassing not just satellites but also drones and other aerial solutions. 

With the imminent adoption of methane regulation, I'm keen to hear perspectives from operators, technology providers, and service providers and understand their views on the intricacies and the feasibility of meeting various obligations outlined in the regulation. These insights will be invaluable, especially as we look forward to the next stage of the legislative process and the forthcoming review of the regulation in the coming years. 

Interested in learning more?

Emils Lagzdins will be speaking at the Methane Mitigation Europe Summit taking place in Amsterdam, 12-14 February, 2024. Join Emils for an interactive discussion on the outcomes of COP28 and the regulatory landscape, plus hear from Europe's leading oil and gas operators, academics, industry initiatives and much more. Download the agenda for more information.