EU pauses methane penalties amid energy crisis, US pressure

By Reuters

Published on 20 Jul 2026 and updated on 20 Jul 2026.

The suspension highlights the EU's struggle to balance its climate goals with the need to secure energy supplies during geopolitical turmoil.

The European Union has recommended the suspension of penalties for oil and gas companies that breach its methane emissions standards, following pressure from the United States and other countries.

On Monday, the European Commission recommended that EU member states refrain from imposing penalties during 2027-2030 to avoid disruptions to energy supply. The regulation was scheduled to take effect at the start of next year, but the energy crisis triggered by the US-Iran war has complicated matters.

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The commission said the suspension would give importers time to reach compliance “while ensuring security of supply in a context of global energy markets tightness caused by the ongoing blockade of the Strait of Hormuz and the conflict in the Middle East“.

The EU Methane Regulation would have seen companies face fines of up to 20 percent of annual turnover for failing to comply with European-equivalent emissions monitoring rules.

The US, other oil- and gas-producing countries, fossil fuel industry groups, and some EU member states had demanded changes to the law.

US Energy Secretary Chris Wright, alongside Algeria, Nigeria and Qatar, wrote to the EU in June, warning of potential disruptions to Europe’s oil and gas supply.

A group of 17 EU member states also asked for the law to be delayed.

Environmental groups have sought to hit back, urging Brussels to keep the penalties in place.

However, the suspension announced on Monday is unlikely to satisfy the critics. The commission noted that “all obligations stemming from the Regulation will continue to apply”.

In addition, the European Commission’s recommendation is not legally binding, but courts are required to take the recommendation into account.

The commission noted that although methane is the second-greatest contributor to climate change, “geopolitical developments in the Middle East are re-shaping the global energy system”.

Restricted traffic through the Strait of Hormuz has disrupted the flow of oil and gas for months, and with the current renewed tensions between the US and Iran, fears of supply shortages remain high.

Environmental groups have criticized the suspension, urging Brussels to keep penalties in place. However, the Commission noted that other obligations under the regulation remain in effect, suggesting the pause may be temporary. The energy crisis, exacerbated by the US-Iran war and the Strait of Hormuz blockade, continues to shape EU policy.