In 2024, the EU absorbed 70 percent of the UK’s crude oil exports—worth £11.4 billion—and nearly all gas exports at £3.9 billion. This heavy reliance on European buyers places the UK oil and gas sector at the center of the EU’s Methane Emissions Regulation (MER), a law that could reshape trade flows by 2030. With methane now a pivotal metric in energy diplomacy, UK exporters face regulatory gaps that threaten their commercial position.
The MER introduces methane intensity standards for imports of oil, gas, coal, and eventually fossil-based hydrogen with carbon capture. Importers bear the compliance burden, but producers supplying them must provide credible data on emissions. By 2027, UK companies will need to prove equivalence in monitoring, reporting, and verification (MRV) to EU standards, with methane intensity thresholds applied by 2030. Failure to align risks exposing UK crude and gas to penalties of up to 20 percent of an importer’s annual turnover—costs that will inevitably flow back up the supply chain.
The UK framework for methane oversight—anchored by the Environmental and Emissions Monitoring System (EEMS)—has existed for decades, but falls short of EU requirements. EEMS covers operated offshore assets and reports aggregated data, whereas EU MER and the UN’s OGMP 2.0 initiative demand source-level granularity, coverage of non-operated joint ventures, and third-party verification. Notably, EEMS excludes emissions from abandoned wells, which are material under EU definitions. These divergences create both compliance and reputational risks, particularly once the European Commission begins publishing methane performance profiles in 2026.
The numbers underscore the urgency. In 2023, UK oil and gas operations emitted 145 kilotons of methane. Gas-related sources accounted for 87 percent of the total, driven mainly by fugitive emissions in distribution networks (109.8 kt). Yet when focusing only on upstream emissions, oil-related venting and flaring dominate. This duality highlights how inventory methodologies shape narratives: the UK’s GHG Inventory suggests distribution leaks are the primary issue, while the IEA’s Methane Tracker points to offshore production as the main culprit. Such inconsistencies complicate the credibility of UK reporting in the eyes of EU regulators.
Economics further complicates alignment. The UK Continental Shelf (UKCS) is a mature basin with declining output—59 million tonnes of oil equivalent in 2024, down from 228 mtoe in the early 2000s. As production falls faster than emissions, methane intensity per barrel is likely to rise, even if absolute emissions continue to decline. This structural disadvantage means UK exporters may look comparatively dirtier on EU metrics, despite having historically lower carbon intensity than many global competitors.
Policy signals are mixed. The Labour government elected in 2024 pledged no new oil and gas exploration, shifting focus to offshore wind, CCS, hydrogen, and decommissioning. At the same time, it remains dependent on LNG imports, which—despite their higher lifecycle emissions—are politically framed as a flexible bridge. The contradiction is clear: the UK is scaling back its domestic upstream sector while maintaining fossil imports that are less controlled for methane.
Some UK operators may choose to pre-empt regulation by aligning voluntarily with OGMP 2.0 standards. Currently, only a handful—BP, Harbour Energy, Ithaca Energy, ONE-Dyas, and Serica Energy—have joined. For others, investment in advanced MRV systems risks stranding capital in a declining basin. Yet inaction could prove more costly, as EU buyers increasingly demand verified emissions data before renewing contracts.
The UK government faces a strategic choice: negotiate MRV equivalence with Brussels, or risk ceding market access to competitors with more credible methane data. The Climate Change Committee has previously suggested mechanisms like a carbon border adjustment or import standards to address methane intensity. However, political appetite remains low, with courts already challenging the credibility of the government’s Carbon Budget Delivery Plan.
What is clear is that proximity to the EU market offers no inherent advantage. Trade flows will depend not on distance, but on emissions transparency. In the emerging methane economy, credibility is currency—and the UK’s current framework is running a deficit.
