EPA is moving to impose financial penalties for excessive methane emissions within the oil and gas sector.
The proposed rule, announced Jan. 12, is part of the ongoing Methane Emissions Reduction Program established through the Inflation Reduction Act, which called for the penalties.
As required by the IRA, the waste methane emissions charge would apply to 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. The charge would start at $900/MT of excess emissions in 2024, then increase to $1,200 in 2025 and $1,500 in 2026.
EPA’s proposed rule spells out how the charge will be calculated and how exemptions will be granted. The agency said the charge will encourage the industry to stay on target to reduce its emissions, which can be accomplished through readily available technology.
The agency said it expects gradually fewer facilities will be at risk of incurring the charge as they reduce their emissions sufficiently to comply with the recently finalized final rule in December establishing performance standards for new sources of methane and setting emissions guidelines for states to follow.
There are two other key components of the IRA’s methane program: EPA is offering more than $1 billion in financial and technical assistance to speed the transition to low- and non-emitting oil and gas technologies. The agency is also working with the industry and other stakeholders to improve the Greenhouse Gas Reporting Program and increase the accuracy of reported methane emissions.
Oil and natural gas operations are the largest industrial source of methane emissions in the U.S., EPA said. Methane is targeted because it is a superpollutant, roughly 28 times more potent as a greenhouse gas than carbon dioxide and responsible for about a third of the warming effect of all greenhouse gases.
“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 Administrator Michael Regan said in a news release. “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.”
“It’s common sense to hold oil and gas companies accountable for this pollution,” Environmental Defense Fund President Fred Krupp said. “Proven solutions to cut oil and gas methane and to avoid the fee are being used by leading companies in states across the country.”
The American Petroleum Institute had a different take. “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,” it said. “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.”
U.S. Sen. Kevin Cramer (R), representing the oil-rich state of North Dakota, decried the impact of the “burdensome” charges. “Democrats in Washington and their climate-zealous allies jammed the partisan Inflation Reduction Act through Congress, placing backwards, overburdensome regulations on domestic energy. 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.”
