Regulation of Methane Emissions in the Oil and Gas Industry: European Commission Recommendation and Brazil’s Progress on the Regulatory Agenda

On July 20, 2026, the European Commission issued two recommendations addressed to the Member States of the European Union concerning the application of Regulation (EU) 2024/1787 (the Regulation), which provides for the reduction of methane emissions in the energy sector. The main recommendation advises Member States to refrain from applying fines on importers of oil, natural gas, and coal that fail to comply with the obligations set forth in the Regulation, for a three-year period (2027 to 2029).

Adopted in June 2024, the Regulation established monitoring, reporting, and verification (MRV), and mitigation obligations for domestic European production and extended equivalent requirements to imported fossil fuels, which account for most of the bloc’s consumption.

Among the obligations imposed on importers, the following stand out:

• MRV equivalence: As of January 1, 2027, importers must demonstrate that the oil, natural gas, and coal they import come from producers subject to measurement and MRV measures equivalent to those imposed on domestic production.
• Methane intensity: As of August 5, 2028, importers must report to the competent authorities the methane intensity of the production of the fuels placed on the EU market.
• Maximum values: As of 2030, fossil fuels placed on the European market must comply with maximum methane intensity values, to be defined by the European Commission.
• Penalties: Member States are responsible for establishing effective, proportionate, and dissuasive penalties, which may range from public notices to administrative fines of up to 20% of the annual turnover of the previous financial year.

Following pressure from the industry and from countries that export to Europe, and on the grounds of safeguarding security of energy supply, the European Commission issued the recommendations on July 20, 2026. In addition to the temporary suspension of fines, the second recommendation addresses the compliance solutions available for the obligations applicable as of January 1, 2027, clarifying that importers may rely on mechanisms such as “trace and claim” and certification, without the need for physical tracing of the imported molecules .

One aspect that deserves attention is that the recommendations are not binding and do not amend the text of the Regulation: the substantive MRV and mitigation obligations remain fully in force during the grace period, from which only the application of fines is suspended. Since enforcement powers lie with the Member States, adherence to the recommendation may vary across jurisdictions, resulting in asymmetric treatment of importers depending on the country through which the fuel enters the bloc.

In parallel, the agenda has been gaining traction in Brazil since the publication of CNPE Resolution No. 8, of September 3, 2024, issued by the National Energy Policy Council (CNPE). The CNPE Resolution No. 8 set forth guidelines for the decarbonization of exploration and production (E&P) activities and provided that “the ANP shall adopt measures that contribute to the reduction of greenhouse gas emissions from oil and natural gas exploration and production activities, including fugitive methane emissions.” Subsequently, the Brazilian National Agency for Petroleum, Natural Gas and Biofuels (ANP) opened a specific proceeding on the matter, including the regulation of methane emissions in its 2025-2026 Regulatory Agenda. It also submitted to Prior Consultation No. 4/2025, the Preliminary Study for the Regulation of Methane Emissions, which opened on September 22, 2025.

On July 24, 2026, the ANP’s Board of Directors approved the opening of a public consultation and public hearing for the partial revision of ANP Resolution No. 806/2020, which governs the flaring and losses of natural gas in E&P activities. The proposal provides for fugitive methane emissions to be carved out of Resolution No. 806/2020 and to become subject to dedicated regulation, as well as for stricter controls over extraordinary flaring (emergencies, unplanned compressor shutdowns, and well tests) and the elimination of the mechanism allowing the subsequent validation of volumes flared in excess of authorized limits. According to the announced schedule, the public consultation is expected to be opened in November 2026, the public hearing to be held in February 2027, and the final texts to be published in May 2027.

In this scenario, it is advisable that Brazilian producers and exporters assess the maturity of their leak detection and repair and emissions reporting programs, mapping gaps against European standards ahead of the entry into force of the equivalence obligations on January 1, 2027, and closely follow the ANP’s participatory proceedings, which represent a concrete opportunity to contribute to the design of the Brazilian regulation before it is consolidated.

The Environmental, Climate Change and Sustainability and Global Energy practices of Tauil & Chequer Advogados in association with Mayer Brown remain available to provide further clarification on the matter and on its regulatory impacts on the oil and gas chain.