Investors urge EU to uphold methane rules despite US pressure

By Virginia Furness and Kate Abnett

LONDON (Reuters) -Investors representing more than 4.5 trillion euros ($5.3 trillion) of assets have urged the EU not to water-down its methane emissions law amid concerns the rules may be weakened to ease U.S. LNG imports, according to a letter seen by Reuters. 

Money managers including Ninety One, Pictet Group, Railpen and Royal London Asset Management urged the EU to stay the course on rules requiring importers of oil and gas to monitor and report the methane emissions of their suppliers.

Methane is one of the most potent greenhouse gases and scientists say it is responsible for about one-third of the warming experienced to date since pre-industrial times.  

Investors are concerned the European Union's methane rules will be brought into the scope of the bloc's simplification agenda after U.S. energy secretary Chris Wright said recently the current legislation would prevent the United States from exporting liquefied natural gas to Europe. 

"The goals are admirable, and we all want to reduce methane emissions, and we will reduce methane emissions. But having laws that will prevent American gas coming here would be completely unproductive from a social cost and environmental perspective. So yes, those laws absolutely need to be fixed," Wright said in September. 

The first phase of the EU methane law is in force and does not appear to have affected U.S. gas exports to Europe - with importers of gas into Europe having to report details of their suppliers' efforts to reduce methane emissions from May 2025.

A European Commission spokesperson said it was confident EU methane regulation would not pose any barriers to trade. 

The EU has pledged to hike its purchases of U.S. energy - including LNG, as well as oil and nuclear fuel - to $250 billion per year, as part of a trade deal struck earlier this year.

The investor group warned that reopening the regulation would introduce unpredictability and undermine companies and investors working towards complying with the rules, as well as slow down efforts to reduce the volume of highly damaging methane gas released into the atmosphere. 

"Watering down regulation that companies have already based investment decisions on is counterproductive and risks undermining globally agreed methane reduction efforts," said Eric Pederson, head of responsible investments at Nordea Asset Management. 

Europe has massively increased its imports of U.S. LNG, as it seeks to replace Russian energy after Moscow's full-scale invasion of Ukraine in 2022.

The U.S. supplied 57% of the EU's LNG, or 49.2 billion cubic metres, in January-August this year, Commission data show. The U.S. supplied 28% of the EU's LNG - or 18.9 bcm - in 2021, the year before Russia's full-scale war in Ukraine.

Industries say they are more concerned by a tougher phase of the EU methane law, which will apply from 2027.

($1 = 0.8508 euros)

(Reporting by Virginia FurnessEditing by Mark Potter)