In a US first, the oil and gas sector will pay fines for excess methane emissions


The US Environmental Protection Agency (EPA) will fine oil and gas companies for emitting excess methane – the first federal government tax ever on greenhouse gas emissions.

As US gas and oil reach record levels of production, enter the EPA’s Waste Emissions Charge, which is part of the Methane Emissions Reduction Program – which in turn is part of the Inflation Reduction Act.

The Waste Emissions Charge is designed to get fossil fuel companies to quickly deploy available technologies and best practices to reduce methane emissions and other harmful air pollutants.

That’s because methane is a climate “super pollutant” that’s more potent than carbon dioxide. It’s responsible for around one-third of global warming.

The oil and gas sector is the largest industrial source of methane emissions in the US, so reducing methane emissions is one of the most effective actions that can be taken immediately to fight climate change.

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. It only applies to emissions that exceed the statutorily specified levels.

That’s EPA’s stick; here are its carrots. The US Department of Energy (DOE) will provide over $1 billion of Inflation Reduction Act money to accelerate the transition to “no- and low-emitting oil and gas technologies.” That includes funds for methane monitoring, the reduction of methane emissions, and finding and fixing leaks in wells and pipes.

EPA is also working with the fossil fuel industry to improve the Greenhouse Gas Reporting Program and increase the accuracy of reported methane emissions. And accuracy could be an issue because it’s an honor system – oil and gas companies self-report exceeded methane emissions levels set by Congress, and EPA doesn’t verify the reports.

The fossil fuel sector is unsurprisingly making noise about fighting the new methane fines – the American Petroleum Institute wasted no time in calling for them to be repealed. EPA administrator Michael S. Regan said that today’s proposal will “support a complementary set of technology standards and historic resources from the Inflation Reduction Act to incentivize industry innovation and prompt action.”

Representative Frank Pallone Jr. (D-NJ), who sits on the House Energy and Commerce Committee, said in a statement:

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.

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.

Photo: Juan Mt on

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