EPA implements climate law’s methane fee for oil and gas companies
The Environmental Protection Agency (EPA) issued a final rule Tuesday that implements a charge for oil and gas companies that release too much of the planet-warming gas methane.
The fee was passed as part of 2022’s Inflation Reduction Act, Democrats' climate, tax and health care bill.
Methane is a planet-warming pollutant that is about 28 times as powerful as carbon dioxide. Oil and gas production is one major source of methane emissions, because methane — the main component of natural gas — is sometimes released or burned during that process.
Under the 2022 law, companies that emit methane at levels equivalent to 25,000 metric tons of carbon dioxide each year must pay for their excess emissions. That fee is $900 per metric ton this year, $1,200 for emissions next year and $1,500 for emissions the following year.
Much of this is set out in the law, and the EPA’s rule details how the charge will be implemented.
The EPA estimates the program will prevent a total of 1.2 million metric tons of methane from entering the atmosphere, with climate gains equivalent to taking nearly 8 million gas-powered cars off the road for a year.
It will cost the industry $2.2 billion to comply, the agency estimates.
This program could be scrapped by Congress in the months ahead. It was part of a law that passed by a process called budget reconciliation, which allows certain legislation to evade the filibuster — only requiring 50 votes in the Senate. It passed the House and Senate without a single Republican vote.
Now that the GOP has secured a trifecta, Republicans could pursue their own reconciliation bill that eliminates the program.
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.