The European Commission is preparing to give fossil-fuel exporters another year of flexibility under the EU’s methane regime as Brussels responds to high energy prices, pressure on European refineries and concerns over security of supply.

European Commission President Ursula von der Leyen has announced an additional year of flexibility for energy exporters facing new EU methane requirements, marking the latest adjustment to climate legislation as Brussels attempts to contain rising energy costs.

Addressing the European Parliament in Strasbourg on Tuesday, von der Leyen said Europe remained exposed to high energy prices and volatile international fossil-fuel markets and confirmed that exporters would receive “one more year” to prepare for the methane rules.

She also announced a strategic dialogue with the European refining sector aimed at reducing costs and protecting supplies, according to the Commission’s published remarks.

The announcement affects a regulation that has increasingly become an energy-security issue rather than solely an emissions policy.

The EU’s Methane Regulation, adopted in 2024, introduced progressively stricter requirements for companies supplying oil, natural gas and coal to the European market. Importers have already been required to provide information about the origin of fuel and the systems used to measure and reduce methane emissions.

A more demanding stage was due from January 2027. Importers would have to demonstrate that fuel supplied under contracts concluded or renewed since August 2024 came from producers operating monitoring, reporting and verification systems equivalent to EU standards.

The rules are technically complex because European importers do not always buy directly from producers. Gas and oil may pass through traders, hubs, blending systems and several contractual relationships before reaching Europe.

The Commission’s own guidance for importers acknowledges those difficulties, particularly where companies must trace production information through complicated supply chains.

EU Today highlighted the problem in July, when an International Energy Agency assessment raised concerns that the rules could restrict Europe’s available oil supply. The dispute has since intensified because European fuel markets have become considerably tighter.

That pressure can also be seen in the cost of imported energy. EU Today reported last month that the value of EU petroleum imports had risen by 55.8 per cent in the second quarter of 2026 even though the physical volume purchased increased by only 1.2 per cent.

Von der Leyen’s intervention therefore comes against a different market background from the one in which the methane legislation was originally adopted.

The Commission has not abandoned its objective of reducing methane emissions from fossil-fuel production. Methane remains one of the most powerful greenhouse gases, and the regulation is intended to use the size of the European energy market to influence production standards outside the EU.

Instead, Brussels is attempting to adjust implementation so that regulatory requirements do not further restrict supply at a time of elevated energy prices.

The precise legal form of the additional year of flexibility has not yet been detailed in von der Leyen’s announcement. Existing requirements remain contained in Regulation (EU) 2024/1787, meaning that changes to deadlines or enforcement will have to be translated into the appropriate legal or administrative measures.

The Commission had already moved towards greater flexibility earlier this year. In July it issued recommendations designed to clarify contractual arrangements and advised national authorities on the application of penalties to importers while security-of-supply concerns persisted.

The broader problem is European energy competitiveness.

Von der Leyen told Parliament that Brussels intends to begin a strategic dialogue with refineries. European refining capacity has contracted over the longer term, leaving the continent more dependent on imported diesel and other finished petroleum products when individual plants close or external supply routes are disrupted.

The Commission is also expected to propose measures aimed at increasing electricity’s share of European energy consumption as part of its attempt to reduce dependence on imported fossil fuels.

The latest methane adjustment therefore fits a wider shift in Brussels. Climate targets remain formally intact, but implementation is increasingly being examined alongside energy prices, industrial competitiveness and the security of physical supplies.

The extra year gives exporters additional time. It also gives the Commission another year to resolve a question that has become much more urgent in 2026: how far Europe can tighten conditions on imported energy while remaining heavily dependent on those imports.

Italy expects its budget deficit to rise above the European Union’s three per cent reference level again next year as Giorgia Meloni’s government uses new EU fiscal flexibility to finance defence and measures responding to higher energy costs.

Rome’s latest multi-year fiscal projections put the 2027 deficit at 3.4 per cent of GDP, substantially above the previous target of 2.8 per cent.

The increase follows a planned fall to 2.9 per cent this year, which would bring Italy below the EU’s three per cent threshold for the first time since 2019. The deficit stood at 3.1 per cent in 2025.

The change reflects Italy’s decision to use the EU’s national escape clause, allowing member states under specified conditions to deviate temporarily from their agreed expenditure paths.

Under the latest projections, Rome intends to use fiscal flexibility worth 0.6 per cent of GDP in both 2027 and 2028 for defence and energy-related spending. The additional expenditure amounts to roughly €29 billion across the two years, while the deficit is projected at 3.2 per cent in 2028.

The decision turns a long-running dispute over fiscal flexibility into a test of the EU’s revised budget framework.

The national escape clause was introduced in the 2024 reform of the Stability and Growth Pact. It permits a member state to deviate temporarily from its fiscal path when exceptional circumstances outside its control have a major effect on public finances, provided medium-term fiscal sustainability is not endangered.

The mechanism was subsequently used to give governments greater room to increase defence spending. In 2026, the Commission also moved to broaden its application to energy-security expenditure.

Italy has been among the governments pressing hardest for such flexibility.

In August, EU Today reported that Rome intended to use the available fiscal room fully for energy measures but only partly for defence. The decision illustrated the competition between longer-term military investment and the immediate political pressure created by household and industrial energy bills.

The latest projections make that trade-off larger.

Italy’s annual inflation rate increased to 4.1 per cent in September, from 3.2 per cent a month earlier. Meloni has sought additional room from Brussels to cushion the economic effect of elevated energy costs.

At the same time, the government has improved its growth forecasts.

GDP is now expected to expand by one per cent in 2026, compared with an earlier projection of 0.6 per cent. Growth for 2027 has been revised from 0.6 to 0.8 per cent.

Those figures provide some additional room, but Italy’s debt remains the larger constraint.

Public debt is projected to rise from 138.1 per cent of GDP this year to 138.5 per cent in 2027 before edging down to 137.9 per cent in 2028. The government now expects the debt ratio to begin falling a year later than previously planned.

That leaves Rome in an unusual position. It expects formally to bring its underlying deficit below the EU threshold while headline borrowing rises above three per cent once exceptional spending is included.

Economy Minister Giancarlo Giorgetti has said Rome is discussing with the European Commission how the calculation will affect Italy’s attempt to leave the EU’s excessive deficit procedure.

The Commission will therefore have to judge not only Italy’s fiscal trajectory but how extensively exceptional expenditure can be accommodated under rules Brussels itself has made more flexible.

That question has already generated concern.

EU Today reported last month that the European Fiscal Board had warned that exceptions were beginning to weaken the clarity of the revised rules. The watchdog has been particularly critical of allowing room initially associated with higher defence spending to be extended to energy-resilience measures.

Italy provides one of the clearest examples of the problem.

Rome is trying simultaneously to increase military capacity, protect households and businesses from energy costs and demonstrate that its very high debt remains manageable.

It has also argued that European rearmament cannot proceed unless governments have sufficient room to finance it. The same tension emerged in Italy’s debate over participation in the EU’s SAFE defence loan programme.

The EU has given governments more flexibility to manage those competing demands. Italy’s 2027 budget will show how far that flexibility can stretch before the argument returns to the credibility of the fiscal rules themselves.

Core inflation, which excludes volatile food and energy prices, rose to 8.7% year-over-year in August, up from 8.4% in July.

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