Uncertainty on Methane Emission Fee as Biden Term Nears End

The US Environmental Protection Agency (EPA) has set a fee that big oil and gas producers would have to pay for methane emissions.

The news is likely to be welcomed by climate activists and groups attending COP29 climate summit in Azerbaijan, which started on Monday, as many see methane as a “super pollutant” – perhaps the most worrying cause of global warming.

The issue is tricky as oil and gas facilities are just one of a handful of sources of methane emissions, ranging from cattle, to thawing permafrost and rotting waste at landfill sites. And a new concern is that incoming president Donald Trump – a notorious climate sceptic and gas enthusiast – will scrap the fee, as Reuters reported on Tuesday (Nov 12).

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The methane charge is among the last actions the outgoing Biden Administration has taken to tackle the second most prevalent greenhouse gas after carbon dioxide that tends to leak into the atmosphere undetected from drill sites, gas pipelines and other oil and gas equipment.

The fee will start at $900 per metric ton of methane emitted in 2024, and increases to $1,200 in 2025, and $1,500 for 2026 and beyond. Under the rules, it would only apply to facilities that release more than 25,000 tons per year of carbon dioxide equivalent, according to the EPA’s announcement.

US officials announced the rule on the second day of the United Nations’ COP29 climate conference in Baku, which includes a special side event on methane.

The US had led the push for a Global Methane Pledge, a voluntary pact signed by over 100 countries that seeks to cut global methane emissions 30% by 2030. The world’s top oil and gas producer has also made cooperation on methane a centrepiece of its climate engagement with China.

Fee is part of climate bill passed by Congress

The fee was mandated by the 2022 Inflation Reduction Act. The EPA last year finalized methane emission standards for the oil and gas sector, but had not completed rules for the fee intended to penalize companies that miss those standards.

“The final Waste Emissions Charge is the latest in a series of actions under President Biden’s methane strategy to improve efficiency in the oil and gas sector, support American jobs, protect clean air, and reinforce US leadership on the global stage,” EPA Administrator Michael Regan said.

The EPA said the Methane Emissions Program, being implemented with the Department of Energy, will provide $1.36 billion “to help monitor, measure, quantify, and reduce methane emissions from the oil and gas sector.”

That financial and technical assistance aims to promote the adoption of technologies “to mitigate emissions at low-producing conventional wells and other oil and gas infrastructure, to support methane monitoring and measurement nationwide, and to provide transparent emissions data to impacted communities.”

Methane has more warming potential than carbon dioxide and breaks down in the atmosphere faster, so reining in methane emissions can have a swift impact on limiting climate change.

The EPA estimated that this rule alone would lower cumulative emissions by 1.2 million metric tons of methane through 2035 — the equivalent of taking nearly 8 million gasoline-powered cars off the road for a year.

In January, oil and gas trade group the American Petroleum Institute called on Congress to repeal the fee.

After the November elections, in which Republicans are poised to hold control of the Senate, House and presidency, the prospect of a repeal has become more likely.

The US move follows a law with methane regulations imposed by the European Union in May.

The EU requires the “gas, oil and coal industry in Europe to measure, monitor, report and verify their methane emissions according to the highest monitoring standards, and to take action to reduce them.”

It also requires the European Commission to set up a monitoring tool on global methane emitters to provide information, based on satellite data, on the magnitude, occurrence and location of high methane-emitting sources occurring within or outside the EU.