EPA Proposes New Methane Fees, API Pushes Back
Starting this year, the proposed rule would charge oil and gas companies at least $900 per ton of methane, increasing to $1,200 per metric ton of methane in 2025.
Last Friday, the U.S. Environmental Protection Agency (EPA) announced a proposed rule to “tackle wasteful” methane emissions from the oil and gas sector, delivering on Congress’ directive in the Inflation Reduction Act to incentivize adoption of industry best practices that reduce pollution.
The proposed rule will assess a charge on certain large emitters of waste methane from the oil and gas sector that exceed emissions intensity levels set by Congress.
Working in tandem with unprecedented funding secured by President Biden under the Inflation Reduction Act and recently finalized technology standards for the industry issued in December 2023, the proposed Waste Emissions Charge encourages the early deployment of available technologies and best practices to reduce methane emissions and other harmful air pollutants before the new standards take effect.
“Under President 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. We are laser-focused on working collectively with companies, states, and communities to ensure that America leads in deploying technologies and innovations that aid in the development of a clean energy economy.”
“I’m pleased to see the Biden Administration move forward with this critical program to slow climate change and protect our one and only planet,” said Senator Carper, Chairman of the Senate Environment and Public Works Committee. “We know methane is over 80 times more potent than carbon dioxide at trapping heat in our atmosphere in the short term. Thankfully, the Methane Emissions Reduction Program – which Congress adopted as part of the Inflation Reduction Act – will incentivize producers to cut wasteful and excessive methane emissions during oil and gas production.”
“For too long it has been cheaper for oil and gas operators to waste methane rather than make the necessary upgrades to prevent leaks and flaring. Wasted methane never makes its way to consumers, but they are nevertheless stuck with the bill,” said Rep. Frank Pallone, Jr., Ranking Member of the House Energy and Commerce Committee. “The Methane Emissions Reduction Program and the proposed Waste Emissions Charge will ensure consumers no longer pay for wasted energy or the harm its emissions can cause. I commend EPA for taking the next step to hold the largest polluters accountable and protect American families from dangerous methane pollution.”
“EPA’s proposal for a fee on oil and gas methane pollution implements the clean air protections for Americans that were part of the Inflation Reduction Act,” said Fred Krupp, President of the Environmental Defense Fund. “It’s common sense to hold oil and gas companies accountable for this pollution. Proven solutions to cut oil and gas methane and to avoid the fee are being used by leading companies in states across the country.”
Methane is a climate “super pollutant” that is more potent than carbon dioxide and responsible for approximately one third of the warming from greenhouse gases occurring today. The oil and natural gas sector is the largest industrial source of methane emissions in the United States. Quick reduction of these methane emissions is one of the most important and cost-effective actions the United States can take in the short term to slow the rate of rapidly rising global temperatures.
EPA issued a final rule in December 2023 to sharply reduce methane emissions and other harmful air pollution from new and existing oil and gas operations. In addition, EPA is working to implement the three-part framework of the Inflation Reduction Act’s Methane Emissions Reduction Program.
First, EPA is partnering with the U.S. Department of Energy (DOE) to utilize resources provided by Congress in the Inflation Reduction Act to provide over $1 billion dollars in financial and technical assistance to accelerate the transition to no- and low- emitting oil and gas technologies, including funds for activities associated with low-producing conventional wells, support for methane monitoring, and funding to help reduce methane emissions from oil and gas operations.
Second, EPA is working with industry and other stakeholders to improve the Greenhouse Gas Reporting Program and increase the accuracy of reported methane emissions.
Third, with today’s proposal, EPA seeks to encourage facilities with high methane emissions to meet or exceed the levels of performance set by Congress – performance that is already being achieved by leading oil and gas companies. The Inflation Reduction Act established a Waste Emissions Charge for methane from certain oil and gas facilities that report emissions of more than 25,000 metric tons of carbon dioxide equivalent per year to the Greenhouse Gas Reporting Program.
As directed by Congress, the Waste Emissions Charge starts at $900 per metric ton of wasteful emissions in 2024, increasing to $1,200 for 2025, and $1,500 for 2026 and beyond, and only applies to emissions that exceed the statutorily specified levels.
EPA’s proposed rule addresses details regarding how the charge will be implemented, including the calculation of the charge and how exemptions from the charge will be applied. Facilities in compliance with the recently finalized Clean Air Act standards for oil and gas operations would be exempt from the charge after certain criteria set by Congress are met. The agency expects that over time, fewer facilities will face the charge as they reduce their emissions and become eligible for this regulatory compliance exemption.
In the meantime, the Waste Emissions Charge will help encourage the oil and gas industry to stay on target to lower emissions. Oil and natural gas operations with methane emissions in excess of the emissions intensity levels established in the Inflation Reduction Act can reduce or eliminate any charge by deploying readily available technologies to reduce harmful and wasteful emissions. This program will help to level the playing field for industry leaders already employing best practices and drive near-term opportunities for more widespread methane reductions while EPA and states work toward full implementation of the Clean Air Act standards.
Together, EPA’s Clean Air Act rule and the three Inflation Reduction Act provisions will advance the adoption of clean, cost-effective technologies, reduce wasteful practices, and yield significant economic and environmental benefits, while driving continued innovation in methane detection, monitoring, and mitigation techniques.
For more information, please visit the Methane Emissions Reduction Program website.
The Crude Life’s founder Jason Spiess disagreed with the EPA’s proposed rules, citing this as another example of leadership using politics over people.
"The leadership in Washington and their special interests passed the Inflation Reduction Act through Congress, placing trillions of dollars in new costs into the private sector,” Spiess said. “More elected officials and appointed leaders creating a new marketplace of overburdensome regulations on domestic energy so they can personally profit.”
Spiess added there is more politics over people too in this EPA proposal.
“Ultimately, this new fee is a basic economics lesson, in that, it will pass higher costs onto to the end user,” Spiess said. “Plus in the short term it will reduce production to the end user, increase costs on the energy companies and will send a ripple of layoffs to family businesses.”
The American Petroleum Institute (API) has released a statement after the US Environmental Protection Agency (EPA) unveiled a proposed rule to establish a fee on methane emissions as required by the Methane Emissions Reduction Program in the Inflation Reduction Act (IRA).
The API’s Senior Vice President of Policy, Economics and Regulatory Affairs Dustin Meyer, said: “As the world looks to US energy producers to provide stability in an increasingly unstable world, this punitive tax increase is a serious misstep that undermines America’s energy advantage. 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.”
API has worked with the administration to craft policies that maximise emissions reduction at the lowest cost to society. We are concerned that lack of coordination between policymakers shaping various methane regulations, including the Methane Rule that sets the standards for emissions reductions, the Reporting Rule that will determine what companies may pay under the Methane Fee, and the Methane Fee Rule, could result in regulatory incoherence. For these complex rules to work cohesively, meaningful coordination both within EPA and between federal regulators and the industry throughout the rulemaking process will be critical.
The US natural gas and oil industry is taking action to reduce methane emissions while continuing to produce affordable, reliable energy. Average methane emissions intensity declined by nearly 66% across all seven major producing regions from 2011 to 2021.
Industry-led initiatives like The Environmental Partnership, whose members make up nearly 70% of the US onshore natural gas and oil industry, are helping to accelerate progress on methane emissions reductions by driving collaboration and sharing best practices across the industry.
If you have a news tip, press release, guest suggestion or other content concepts, please email thecontentcreationstudios(AT)gmail(DOT)com
This post was brought to you in part by one of The Crude Life’s fantastic sponsors, please consider supporting their services or learning more about their organization by clicking on the banner below.
Whether you want basic obedience for a family pet or need professional handlers for narcotic and explosive detection, BCK-9 delivers reliable results. With over 20 years of experience in the working dog community, our founder, Dwayne Farris, brings unparalleled expertise in dog training and leak detection techniques.
The BCK-9 team brings a personalized approach to ensure we tailor our services to meet your needs, providing customized solutions that go further than the competition.
With our commitment to the well-being of our clients' dogs and precision and efficiency in our results, the dedicated team of professionals at BCK-9 Services delivers excellence in every service.
Follow BCK-9 Services on their website, Facebook, LinkedIn, Instagram, X (Twitter) or TikTok.