The European Parliament voted on Thursday, 22nd October, to support a three-year postponement of certain methane emissions obligations for oil, gas and coal imports, substantially extending the timetable proposed by the European Commission.

The decision follows pressure from European governments, energy companies and the United States, which have warned that implementing the regulations under the existing timetable could complicate fossil fuel supplies to the European market.

MEPs approved the amendments by 341 votes to 225, with six abstentions. The revised deadlines must now be negotiated with EU governments before they can become legally binding.

The parliamentary position also extends some postponements to European oil and gas producers, going beyond the Commission’s original proposal.

EU moves away from original timetable

The EU Methane Regulation, adopted in 2024, established requirements intended to reduce methane emissions associated with fossil fuel production, transportation and imports.

Methane is a greenhouse gas with a considerably greater warming effect than carbon dioxide over shorter periods. Emissions occur throughout the oil and gas supply chain, particularly through leaks, venting and incomplete combustion.

Under the existing legislation, new monitoring, reporting and verification requirements for imported fossil fuels were scheduled to begin on 1 January 2027.

However, the Commission proposed amendments on 14 October 2026 to give companies additional time to comply.

The European Parliament has now supported a longer postponement than the Commission requested.

Under the parliamentary amendments, importers of crude oil, natural gas and coal would have until 31 May 2031 to demonstrate equivalent monitoring, reporting and verification arrangements for relevant supplies delivered in 2030.

The requirements would cover supply contracts concluded or renewed since 4 August 2024. Older contracts would remain subject to separate reporting requirements concerning efforts to obtain compliance.

Pressure from the United States and EU governments

Energy security concerns have been central to the debate. The United States has become Europe’s largest supplier of liquefied natural gas, particularly following the reduction of Russian pipeline gas deliveries after Moscow’s full-scale invasion of Ukraine.

American officials have argued that certain provisions of the methane legislation could create substantial compliance difficulties for exporters and potentially disrupt gas deliveries.

France, Italy and the Czech Republic have also supported adjustments to the timetable, reflecting concerns about energy costs, administrative burdens and the availability of alternative supplies.

European industrial consumers remain sensitive to fluctuations in natural gas prices, while the continuing conflict in the Middle East has increased uncertainty in international energy markets.

For importers, the principal concern is obtaining reliable information about emissions generated by suppliers operating outside EU jurisdiction.

European companies must demonstrate compliance using data collected throughout production and transportation networks that they do not necessarily control.

Additional changes for European producers

Parliament’s position includes extensions for certain reporting obligations affecting oil and gas operators within the European Union.

Verified reports combining measurements of methane emissions at individual sources and production sites would be subject to revised deadlines.

For assets operated directly by reporting companies, the proposed deadline would move to February 2030. Certain non-operated assets would be covered by a later deadline in August 2031.

The amendments would also permit continuous monitoring systems to replace separate measurement campaigns where the equipment meets the required technical standards.

Independent verification would remain necessary. Romanian MEP Virgil Popescu, a former energy minister, supported the longer timetable, arguing that companies require additional time to make investments in monitoring infrastructure.

Environmental organisations have opposed further postponements, arguing that delays could prolong avoidable emissions and weaken the regulatory framework established in 2024.

Sanctions and energy security provisions

Parliament also supported an exception preventing fossil fuel supplies covered by relevant EU import sanctions from benefiting from the extended deadlines.

Importers would be required to identify the affected volumes, including where restricted-origin fuels form part of mixed shipments.

The exemption would not authorise trade already prohibited by EU sanctions.

A further amendment would require the European Commission to review implementation readiness by July 2029, including the availability of accredited verifiers and potential risks to energy supplies.

The Commission would then be able to propose additional legislative changes if substantial implementation problems remained.

Negotiations with member states

Thursday’s vote does not repeal the methane legislation or automatically postpone its requirements.

The adopted amendments represent the European Parliament’s negotiating position. The Council of the European Union must agree to any changes before the revised legislation can enter into force.

The outcome forms part of a broader debate over European industrial competitiveness and the economic consequences of environmental regulation.

As EU Today recently reported, Brussels is already adjusting parts of its climate-policy framework in response to pressure from energy-intensive industries.

Negotiations over methane reporting will now determine how far those adjustments extend into Europe’s international energy supply chains and whether the EU can preserve the regulation’s emissions objectives under a longer implementation timetable.

European Union negotiators have reached a provisional agreement to revise the rules governing the bloc’s carbon market, increasing the number of emissions allowances that can remain in reserve before being permanently cancelled.

The agreement, reached by the Council and European Parliament on 20th October and announced the following day, raises the invalidation threshold of the EU Emissions Trading System’s market stability reserve from 400 million to 700 million allowances.

The compromise reached by EU negotiators follows months of pressure from energy-intensive industries concerned about carbon prices, electricity costs and competition from manufacturers operating under less restrictive environmental regimes.

The measure requires formal approval before entering into force and forms part of a wider review of the EU’s principal carbon-pricing mechanism.

A larger reserve for future market disruptions

Established in 2019, the market stability reserve was designed to address the accumulation of surplus emissions allowances that had weakened the effectiveness of Europe’s carbon market.

Under the Emissions Trading System, companies in covered sectors must surrender allowances corresponding to their greenhouse gas emissions. The total quantity available is progressively reduced, creating a financial incentive to cut emissions.

The reserve adjusts the supply of allowances entering the market, withdrawing them when there is a substantial surplus and releasing them under specified conditions when supply becomes scarce.

Existing rules also provide for the permanent cancellation of allowances held above a threshold of 400 million.

Under the new agreement, that threshold would increase to 700 million, allowing a larger stock to remain available for potential future release.

The change does not automatically introduce 300 million additional allowances into circulation. Releases would continue to depend on the reserve’s operating rules and market conditions.

According to the Council, more than three billion allowances have been invalidated since the mechanism began operating in 2023.

The Commission initially proposed ending automatic invalidation indefinitely, while the Council’s September negotiating position envisaged a temporary suspension followed by a higher threshold.

The compromise retains invalidation but increases the amount protected from cancellation.

Industry competitiveness enters climate negotiations

The agreement follows growing concern about the cumulative cost of European climate regulation, particularly for steelmaking, chemicals, cement and other energy-intensive sectors. Manufacturers have warned that carbon costs, combined with relatively expensive electricity and industrial gas, complicate investment decisions and weaken their ability to compete internationally.

Brussels must also consider the consequences of production shifting to jurisdictions with lower emissions-related costs, a phenomenon known as carbon leakage. Earlier this year, EU Today examined the Commission’s consideration of changes to industrial protections under the ETS, including the relationship between free allowances and the Carbon Border Adjustment Mechanism.

The latest reserve agreement does not directly change the allocation of free allowances, the emissions cap or the obligations imposed on individual industrial installations. Its principal effect would be to preserve a larger buffer that could become available if future market conditions trigger the release mechanism.

For manufacturers planning investments extending into the 2030s, the availability of allowances and the future trajectory of carbon prices influence production costs and the commercial case for decarbonisation technologies.

Carbon market figures reveal changing conditions

The European Commission reported in May that the total number of allowances in circulation during 2025 stood at approximately 1.023 billion.

Its annual market stability reserve calculation provided for approximately 190.5 million allowances to be withdrawn from auctions between September 2026 and August 2027.

These withdrawals reflect the existing mechanism for reducing market surpluses. The proposed higher invalidation threshold concerns how many allowances can subsequently remain in reserve rather than being cancelled.

The overall emissions cap will continue to decline under the legislation already governing the ETS.

Consequently, preserving a larger reserve does not remove the long-term constraint on emissions or guarantee lower carbon prices for European industry.

The agreement also concerns the established ETS covering power generation, industry and certain other sectors, rather than the separate ETS2 regime for emissions associated with road transport and buildings.

The latter has generated its own political controversy, as EU Today reported following the October European Council summit.

Broader ETS reform remains unresolved

The Council and Parliament have agreed that the question of gradually reducing the invalidation threshold should be considered during the broader ETS review.

That exercise will address the carbon market’s operation over a longer period, when the declining supply of allowances could create tighter conditions.

The present agreement therefore provides an adjustment to the reserve mechanism without reopening the entire emissions trading framework. Following legal and technical finalisation, the provisional deal must be endorsed by both institutions and formally adopted.

The new 700 million threshold would apply after the legislation takes effect, while the larger review of the ETS continues through the EU legislative process.