U.S. EPA Issues Final Rule to Implement Methane Waste Emission Charge for Oil and Gas Sector

The U.S. Environmental Protection Agency on Nov. 12 announced a final rule to support the implementation of a Waste Emission Charge to reduce methane emissions from the oil and gas sector. The 2022 Inflation Reduction Act, or IRA, established the methane emissions fee to impose a charge on certain oil and gas facilities that emit more than 25,000 metric tons of carbon dioxide equivalent annually. The agency estimates that the rule could reduce a cumulative 1.2 million metric tons of methane through 2035, with aggregate economic benefits of almost $2 billion.

The agency’s final ruling outlines the calculation method of the charge, exemptions, and provisions of the charge. Oil and gas entities that comply with the Clean Air Act will be exempt from the emissions charge, provided they meet certain conditions put forth by Congress.

The charge will include emissions data from calendar year 2024 and starts at $900 per metric ton of wasteful emissions, which will increase to $1200 in 2025 and $1500 in 2026. In the IRA, Congress also directed the calculation of the emissions charge to incorporate emissions data from the Greenhouse Gas Reporting Program. In May, the agency issued a final rule to update the emissions reporting process for oil and gas facilities under the Greenhouse Gas Reporting Program.

As methane is far more potent than carbon dioxide in accelerating global warming, reducing methane emissions from the agricultural, and oil and gas sectors is a crucial and cost-effective short-term measure for the U.S. to implement. The IRA includes over $1 billion to finance methane emission monitoring and mitigation activities as a part of its Methane Emissions Reduction Program. Recently, the U.S. Energy Department closed a loan to LongPath Technologies for the installation of over 1,000 remote monitoring towers as part of a real-time methane emissions monitoring network.