EPA to hit oil and gas companies with “methane fee” for drilling waste — but will it last?
washington — Oil and gas companies will for the first time have to pay federal fees if they emit dangerous methane above a certain level, under rules finalized by the Biden administration.
The Environmental Protection Agency’s rule follows a congressional directive contained in the 2022 climate law. The new charges are designed to encourage industry to avoid paying fees by adopting best practices that reduce emissions of methane, the main component of natural gas.
Methane is a climate “superpollutant” that is more potent than carbon dioxide in the short term and accounts for about a third of greenhouse gas emissions. The oil and gas industry is the largest source of industrial methane emissions in the United States, and advocates say reducing methane emissions is an important way to mitigate them climate change.
The rule is scheduled to be announced on Tuesday Azerbaijan International Climate ConferenceIt comes just hours after President-elect Donald Trump tapped former New York Rep. Lee Zeldin to lead the agency during Trump’s second term. If approved by the Senate, Zeldin is expected to roll back or loosen dozens of environmental regulations approved by President Joe Biden as Trump seeks to establish U.S. “energy dominance” around the world.
Trump is likely to target methane fees as part of a series of expected actions he promises to deregulate the oil and gas industry.
Excess methane produced could be charged $900 per ton in 2024, rising to $1,200 per ton in 2025 and $1,500 per ton in 2026, according to the EPA’s overview. Imposition of retroactive fees.
The rule won’t become final until early next year after it is published in the Federal Register.
EPA Administrator Michael Regan said in a statement that the rule would go into effect at the same time as new rules on methane emissions that the EPA implements this year. The rule targets the U.S. oil and gas industry’s role in global warming as Mr. Biden seeks to secure his legacy in fighting climate change.
Regan said the fee, formally known as the “Waste Emissions Fee,” would encourage the early deployment of existing technologies to reduce methane emissions and other harmful air pollutants. The fee “is the latest in a series of strategic methane actions by President Biden to make the oil and gas industry more efficient, support American jobs, protect clean air and strengthen U.S. leadership on the global stage,” he said.
Industry groups and Republican-led states have challenged previous methane rules in court, but failed in a Supreme Court bid to block the rules and the case remains before lower judges.
Opponents argued that the EPA exceeded its authority and set unattainable standards for the new regulations. However, the EPA said the rules are fully consistent with its legal responsibilities and will protect the public.
Regan and other officials said many large oil and gas companies already meet or exceed the methane performance levels set by Congress under the climate law, meaning they are unlikely to be forced to pay new fees.
Even so, the EPA estimates that the rule will result in a cumulative reduction of 1.2 million tons of methane emissions (equivalent to 34 million tons of carbon dioxide) by 2035. This number is in line with the 8 million gasoline-powered cars that are taken off the road in one year, according to the EPA. The agency said the cumulative climate benefits could be as high as $2 billion.
Like previous methane rules, the new charges will almost certainly face legal challenges from industry groups. The American Petroleum Institute, the oil and gas industry’s largest lobbying group, called a fee proposed earlier this year a “punitive tax increase” that “undermines America’s energy advantage.”
API said it looks forward to working with Congress to repeal the “new U.S. energy tax.”
Environmental groups welcomed the upcoming methane fee, saying oil and gas companies should be held accountable for pollution that contributes to global warming. They say oil and gas companies often calculate that it’s cheaper to waste methane through flaring and other techniques than to make necessary upgrades to prevent leaks.
The EPA said it expects that over time, fewer oil and gas companies will be charged for excess methane as they comply with regulations to reduce emissions.
