New recommendations clarify compliance solutions for import requirements and propose a suspension of penalties for three years.
By Michael D. Green and James Bee
On 20 July 2026, the European Commission (Commission) adopted two recommendations on the EU Methane Regulation, intended to guide EU countries on (1) compliance solutions and (2) penalty regimes.
The recommendations come against the backdrop of global uncertainty and energy market volatility. The Commission confirmed that it is working with Member States and industry to ensure that the implementation of the EU Methane Regulation does not “undermine Europe’s security of supply” and that it is continuing to monitor European market supplies closely.
Background to the EU Methane Regulation
The EU adopted the EU Methane Strategy in October 2020 as part of its climate objectives under the Green Deal. The strategy set out a comprehensive approach to reduce methane emissions across the energy, agriculture, and waste sectors, with a particular focus on the energy sector’s mitigation potential and the availability of cost-effective abatement technologies.
Building on the EU Methane Strategy, the EU adopted the EU Methane Regulation, which entered into force on 4 August 2024. The EU-wide legislation regulates methane emissions related to imports of oil, gas, and coal, among other areas, and introduces mandatory requirements for measurement, reporting, and verification (MRV) of methane emissions. Operators are required to conduct regular leak detection and repair surveys, promptly repair detected leaks, and report on their mitigation actions. For more information on the key provisions of the EU Methane Regulation, refer to this Latham article.
Implementation of the EU Methane Regulation is phased, with MRV requirements due to begin on 1 January 2027.
Content of the Recommendations
Compliance Solutions
The first recommendation aims to bring certainty and clarity to importers and suppliers of oil, gas, and coal, as well as to Member States on how to demonstrate compliance with the obligations coming into force on 1 January 2027. It provides guidance on solutions that importers can use to demonstrate evidence of compliance to national authorities, and sets out criteria that Member States should use in assessing solutions.
The guidance does not require physical tracing of specific molecules, deliveries, or cargoes. In the case of more complex supply chains, the guidance clarifies that importers can use solutions such as “trace and claim” and “certification” to demonstrate compliance. These solutions are intended to make compliance easier for industry, without weakening requirements.
Penalties
Enforcement of the EU Methane Regulation, including penalties, will be determined by National Competent Authorities, though there is a requirement that any penalties should be “effective, proportionate and dissuasive” and shall include fines proportionate to the environmental damage and impact on human safety and health, up to a maximum of 20% of annual turnover. The Commission noted that most Member States have not yet established penalty regimes, leading to difficulties for companies in assessing associated risks.
The second recommendation gives clarity on the suspension of fines by Member States for non-compliance, which the Commission says is in order to preserve security of supply. The recommendation clarifies that penalties, as required by the EU Methane Regulation, must remain proportionate and must not endanger security of supply. It recommends that Member States suspend penalties for non-compliance for three years (starting in January 2027 through 2029).
Despite the temporary suspension of penalties, all obligations stemming from the EU Methane Regulation will continue to apply. However, the absence of financial penalties weakens the enforcement mechanism, and raises questions as to how (if at all) compliance will be effectively ensured during the suspension period.
Notably, the two recommendations from the Commission are purely advisory documents and are not legally binding on Member States. However, although the recommendations are advisory, national courts are required to take recommendations into consideration when deciding disputes submitted to them.
Next Steps
Companies should monitor developments at Member State level regarding the establishment of penalty regimes. Businesses should continue to prepare in order to ensure they are ready for compliance when the MRV requirements take effect on 1 January 2027.
This blog was prepared with the assistance of Samantha Banfield and James Thompson at Latham & Watkins.
Latham & Watkins will continue to monitor developments relating to the EU’s energy and climate regulations and the broader European sustainability regulatory landscape.