EPA proposes methane fee for oil, gas company waste
WASHINGTON – Oil and natural gas companies for the first time would have to pay a fee for methane emissions that exceed certain levels under a rule proposed Friday by the Biden administration.
The proposed Environmental Protection Agency rule follows through on a directive from Congress included in the 2022 climate law. The new fee is intended to encourage industry to adopt best practices that reduce emissions of methane and thereby avoid paying.
Methane is a climate “super pollutant” that is more potent in the short term than carbon dioxide and is responsible for about one-third of greenhouse gas emissions. The oil and natural gas sector is the largest industrial source of methane emissions in the United States, and advocates say reduction of methane emissions is an important way to slow climate change.
Excess methane produced this year would result in a fee of $900 per ton, with fees rising to $1,500 per ton by 2026.
EPA Administrator Michael Regan said the proposed fee would work in tandem with a final rule on methane emissions EPA announced last month. The fee, formally known as the Methane Emissions Reduction Program, will encourage early deployment of available technologies to reduce methane emissions and other harmful air pollutants before the new standards take effect, he said.
The rule announced in December includes a two-year phase-in period for companies to eliminate routine flaring of natural gas from new oil wells.
“EPA is delivering on a comprehensive strategy to reduce wasteful methane emissions that endanger communities and fuel the climate crisis,” Regan said in a statement. When finalized later this year, the proposed methane fee will set technology standards that will “incentivize industry innovation’’ and spur action to reduce pollution, he said.
Leading oil and gas companies already meet or exceed performance levels set by Congress under the climate law, meaning they will not have to pay the proposed fee, Regan and other officials said.
Sen. Tom Carper, chairman of the Senate Environment and Public Works Committee, said he was pleased the administration was moving forward with the methane fee as directed by Congress.
“We know methane is over 80 times more potent than carbon dioxide at trapping heat in our atmosphere in the short term,’’ said Carper, D-Del. He said the program “will incentivize producers to cut wasteful and excessive methane emissions during oil and gas production.”
New Jersey Rep. Frank Pallone, the top Democrat on the House Energy and Commerce Committee, said oil and gas companies have long calculated it’s cheaper to waste methane through flaring and other techniques than to make necessary upgrades to prevent leaks.
“Wasted methane never makes its way to consumers, but they are nevertheless stuck with the bill,” Pallone said.
Republicans call the methane fee a tax that could raise the price of natural gas. “This proposal means increased costs for employers and higher energy bills for millions of Americans,” said Sen. Shelley Moore Capito, R-West Virginia.