Oil and gas companies in the United States could soon start paying up to $1,500 in charges for a metric ton (MT) of wasted methane emissions according to a new rule proposed by the U.S. Environmental Protection Agency (EPA).
Under the Inflation Reduction Act of 2022, a Waste Emissions Charge for methane was established for oil and gas facilities that emit more than 25,000 MT of CO2 equivalent per year. The proposed new rule will impose financial penalties on such large emitters of wasted methane, according to a Jan. 12 EPA news release. The Waste Emissions Charge will start at $900 per MT of wasteful emissions in 2024. This charge will increase to $1,200 in 2025 and then to $1,500 for 2026 and beyond.
“Under President [Joe] Biden’s leadership, EPA is delivering on a comprehensive strategy to reduce wasteful methane emissions that endanger communities and fuel the climate crisis,” said EPA Administrator Michael S. Regan.
“Today’s proposal, when finalized, will support a complementary set of technology standards and historic resources from the Inflation Reduction Act, to incentivize industry innovation and prompt action.”
EPA’s proposed charges come after the agency announced a final rule last month aimed at reducing methane emissions and other harmful air pollution from oil and gas operations.
The December final rule set up standards to cut down emissions and issued guidelines for states to follow as they develop plans to restrict methane emissions. It gave the industry a two-year phase-in period for eliminating routine flaring of natural gas from new oil wells.
The proposed rules announced on Jan. 12 “addresses details regarding how the charge will be implemented, including the calculation of the charge and how exemptions from the charge will be applied.”
Republicans have opposed the methane emission charges. “Democrats in Washington and their climate-zealous allies jammed the partisan Inflation Reduction Act through Congress, placing backwards, overburdensome regulations on domestic energy,” Sen. Kevin Cramer (R-N.D.) said in a Jan. 12 statement.
“This fee will reduce production and increase costs, disproportionally harming the working-class Americans who depend on affordable and reliable energy the most. Burdening North Dakota energy producers with more fees and penalties while saddling every American with higher energy is a foolhardy mistake Democrats will have to answer for.”
Industry Opposition
EPA’s proposed charges on wasteful methane emissions are facing strong opposition from oil and gas industry groups.In a Jan. 12 statement, the American Petroleum Institute (API), which represents 600 businesses from the U.S. energy sector, called on Congress to repeal the methane fee.
It pointed out that the oil and gas industry is already taking action to reduce methane emissions. Between 2011 and 2021, methane emissions density declined by almost 66 percent in seven major production regions.
“As the world looks to U.S. energy producers to provide stability in an increasingly unstable world, this punitive tax increase is a serious misstep that undermines America’s energy advantage,” said Dustin Meyer, API senior vice president of Policy, Economics, and Regulatory Affairs.
“While we support smart federal methane regulation, this proposal creates an incoherent, confusing regulatory regime that will only stifle innovation and undermine our ability to meet rising energy demand. We look forward to working with Congress to repeal the IRA’s misguided new tax on American energy.”
The Independent Petroleum Association of America (IPAA) criticized the EPA’s finalized methane emission rules.
The final rule will “lead to the shutdown of 300,000 of the nation’s 750,000 low production wells,” IPAA President Jeff Eshelman said in a Jan. 9 statement.
“The federal government should not use the regulatory process to eliminate much needed sources of energy. Independent oil and natural gas producers are committed to effectively managing their methane and volatile organic compounds (VOC) emissions,” it said.
“At issue is developing appropriate techniques that reflect both the emissions profile and the economic challenges of each segment of the industry from large to small.”
Large increases in the concentration of greenhouse gasses like methane in the earth’s atmosphere won’t trigger any significant changes in the heat balance, he argued.
“Doubling the concentration of methane—a 100 percent increase, which would take about 200 years at the current growth rates—would reduce the heat flow to space by only 0.3 percent, leading to an average global temperature change of only 0.2 degrees Celsius. This is less than one-quarter of the change in temperature observed over the past 150 year,” he said.
