As EU ministers gather in Brussels to debate the bloc’s competitiveness, the ongoing crisis in the Strait of Hormuz has highlighted Europe’s urgent need to protect its energy security, shield consumers and preserve industrial competitiveness.
Separate from the conflict in the Middle East, the EU is on the cusp of knowingly exacerbating its own energy crisis.
From 2027, stringent new methane rules mean the EU risks losing up to 43 percent of its natural gas and up to 87 percent of its oil supply, according to a study by Wood Mackenzie. The rules around monitoring, reporting and verification are so stringent that no country (and likely only few suppliers worldwide) will be able to fully meet the requirements in the foreseeable future.
With a smaller proportion of oil and gas supplies likely to be compliant, less availability means there’s a real risk this looming crisis will affect energy affordability for households and businesses alike.
Remember, these rules have nothing to do with lowering levels of methane, which the legislation does not demand until 2030, but are about adhering to measurement, reporting, certification and verification standards for which neither the European Commission nor member states have done the work to establish in time for implementation.
With a smaller proportion of oil and gas supplies likely to be compliant, less availability means there’s a real risk this looming crisis will affect energy affordability for households and businesses alike.
Consumers will ultimately bear the burden through anticipated higher gas and/or fuel prices; Wood Mackenzie say gasoline and diesel prices could increase by 24 percent and 16 percent respectively. The Commission knows this but appears unwilling to make the necessary changes to reduce the cost burden on its citizens.
High energy costs would further damage the competitiveness of Europe’s energy intensive industries like steel, chemicals and manufacturing — leading the bloc further down the path of additional self-inflicted deindustrialization. Make no mistake — the risk is that factories close, jobs will be lost and household costs continue to rise.
The pinch point is imminent, as many energy importers are deciding now what orders to place for 2027. The refining sector, already battling to stay competitive, is faced with the uncertainty of not just where to source from, but also the prospect of severe penalties for non-compliance; up to 20 percent of annual turnover.
The Commission’s proposition that this will all be fixed by “guidance”, including relaxing penalties, is misguided. Leaving individual member states to decide whether and how to reduce fines for importers compounds the complexity and removes none of the risk. Penalty or not, no company wants to position itself as legally non-compliant.
I want to be clear — we fully support the EU’s ambition on methane. We’re already deploying leading-edge technology on the ground, in the air and even in space to mitigate, monitor and measure.
In the United States, our monitoring system operates 24/7 like a smoke detector to analyze methane emissions data from hundreds of cameras, thousands of sensors, aerial systems and satellites. Across more than 850 sites on around 1.4 million net acres, detection is always on, using artificial intelligence to continuously scan for potential leaks, and enabling a rapid response.
In Germany, we have been reporting on this since 1998 and have achieved methane emissions reductions of more than 95 percent over the past 20 years.
ExxonMobil is raising its voice because we see firsthand the economic disruption, higher prices and lack of competitiveness that the regulation will provoke.
This year, 2026, globally we expect to achieve our 2030 target to reduce the methane intensity (versus 2016) across all operated assets by 70-80 percent. We have joined the U.N. Oil & Gas Methane Partnership 2.0 and we recently received the U.N.’s top rating under this program.
While the EU’s ambition is good, it lacks a proper impact assessment and the implementation requirements and relevant timelines are simply not viable. ExxonMobil is raising its voice because we see firsthand the economic disruption, higher prices and lack of competitiveness that the regulation will provoke. As an operator of two of Europe’s larger and most efficient refineries, we depend on imports from more than 15 countries — only one of which may have the reporting and verification standards in place by 2027.
Simplification is critical; a ‘stop-the-clock’ process would allow for targeted amendments to prevent severe market and supply disruptions for natural gas/liquefied natural gas and crude oil.
This would have zero negative impact on industry’s methane emissions reduction efforts, which still continue at pace.
Europe must stop implementing legislation that creates confusion, complexity and ultimately self-harm.
As the region faces its worst energy crunch in decades, its energy strategy must instead prioritize secure supply and competitive prices while ensuring that regulation supports reliability, affordability and long-term investment.
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